EUR/USD: Pair Could Break Below Key Support
Axiory | Jan 21, 2022 07:29AM ET
Let’s get straight to the point. This problem is the false breakout that happened last week. It gave false hope for a reversal, but now, many fooled buyers have to abandon their long positions, and this may cause havoc on the most popular instrument on the Forex market.
Last week, EUR/USD buyers managed to break two crucial resistances; a horizontal one at the 1.1380 level (yellow) and a dynamic one – blue mid-term down trendline connecting the latest crucial lower highs. That gave us a buy signal, which we now know was fake. This gives us a false breakout pattern (red), which in theory promotes a strong movement in the opposite direction – down.
The price is currently defending the last key support – a dynamic short-term uptrend line, but I can’t guarantee that this one will hold. Chances for that are pretty slim, and the possibility of a breakout is increasing. A breakout of the black line should confirm the dominance of the sellers and bring us a long-term sell signal. The odds for that are pretty significant.
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