Last week, I mentioned that EUR/USD could reach $1.07825 and then bounce back up. On Monday, the price continued to move down and reached an area of supply close to $1.07825, and bounced up.
The move up was more retrace than a bounce because the price had reached both levels mentioned, namely, $1.07825 and $1.09860. Those two resistance levels have been significant for the price in the past, but now they are meaningless due to the demand zone being close to support at $1.07825. This level had lots of buyers waiting to enter into the market. There were also a lot of sellers that wanted to get out of the market before reaching $1.07825 to avoid locking profits. So, they got out at the start of the demand zone.
This scenario pushed the price 300 pips higher within two days, which was more than the average daily pip range for EUR/USD currency pairs. On the move up, the price stopped at the confluence level of resistance, where horizontal resistance was at $1.10755 and the downtrend channel resistance line were crossing. That was the final destination for the price in a bullish move. Over the subsequent two days since, the price returned south and stopped almost at the same level at which the week started. And based on this staring point, we can estimate where the price will move to this coming week.
The chart above presents levels that show both strong and weak influence on price. Strong levels are $1.10755 on the upper side and $1.07825 on the lower side. Weak levels are $1.09860 on the upper side and $1.08846 on the lower side. Currently, the EUR/USD price sits in the middle of the weak levels and since the market is in bearish mode, I am targeting lower levels this week due to a weak EUR currency and relatively strong U.S. dollar, confirmed by the currency strength meter below.
Source: Currency Strength Meter App
The final target is $1.07825 because it is the strongest support the price has in front of it. The weekly support of $1.08846 is not that strong nor significant in the current market overview since it did not hold the price during the previous two week's bearish and bullish scenarios.
The price could stall a little bit, but it will eventually break below. If the price breaks below $1.08846 on a daily basis, we can be sure the price will head down to $1.07825. Entry level would be around $1.09860 if the price makes a bounce from $1.08846. Stop loss would be at $1.10500 which is above Friday's candle high and it will be close to the confluence of resistance. If the price closes below $1.07825, then next support is $1.06736. But to get to this level the price has to show strong selling pressure.
On the upper side we need to see the price above $1.10755 to think about a bullish scenario and seek out bullish entry levels, which are where the price needs to break above to show some strength that could shift the market sentiment from bearish to bullish.
