Last week, we forecast EUR/USD's difficulty in breaking below $1.07825 after moving down to the demand zone.
The start of the week saw the price continue to fall, reaching the $1.07825 support level. On Tuesday, the price formed an indecision candle touching the lower level of the demand zone.
Once reached, the price reversed, touching the supply zone around $1.08846. That supply zone was in the confluence area of resistance which happened to be where the downtrend resistance line crosses the horizontal resistance level.
But, the price had strength to move upwards and on the next day, it reached higher levels, eventually hitting $1.09360—the level its candles from the previous two weeks reached, but could not break above.
Selling pressure on that level formed a strong bearish Pin bar that suggested a move down. On Friday, price followed the bearish Pin bar signal and closed the day below the previous daily candles.
Since EUR/USD broke the strong support level and closed the day below, a future move down is probable. The next target is 100 pips away at support $1.06736.
$1.07000 - $1.07300 is the demand zone where the price will find buyers waiting to open buy orders and where sellers will look to get out.
That is the first level where we will see prices fluctuating and retracing. However, prior to this retrace, we could see EUR/USD retest the current $1.07825 resistance level.
$1.06736 is a slightly weaker support than $1.07825 was, so we can expect breaking of this support to occur more easily than what happened this past week—if the price continues to move down strongly.
Stronger support below that level is found around $1.05000, so if we see the coming week's price below $1.06736, that will become the next long-term target.
On the upper side we have $1.08846 as the first significant short-term resistance and $1.10755 as the main resistance bulls need to break above in order to change market sentiment.
Since the price action on the longer time frames—monthly, weekly, and daily—targets lower levels and we're in a downtrend, it'll be less likely we'll see EUR/USD at higher levels at the moment.
