The euro has had a great run since 12 December. However, it is pausing now and doing so at chart resistance, ahead of tonight’s US non-farm payrolls data. If the data is strong, this situation might provide a selling opportunity either from the resistance or from a false break through it.
EUR/USD – Daily chart
The euro has paused at the resistance of its September peak. In doing so, it has set up a trading range with support at the low of the last three daily candles.
A clear break below this support would signal a second rejection of the resistance. After a large rally, and with the slow stochastic well over bought, this could set up for a significant decline.
The other thing that interests me about this chart is the harmonic, AB = CD level just above the resistance at around 1.2125.
Whipsaw, false breaks of resistance often produce good results for reversal traders. A flick through the resistance, only to fail around the harmonic AB=CD level, could set up for just such a false break. Given the volatility that can surround the non-farm payrolls data, I suggest this situation deserves a place on the pattern traders’ watchlist for the next couple of days.
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