In our previous week's analysis we discussed the EUR/USD price moving down by around 100 pips, and 300 pips in the long term. And within four days, the price reached both targets.
EUR/USD price started the week on Monday with a bearish move down reaching the demand zone around $1.06736. From there, the price bounced back up, but that bounce was a small one.
From there it did not stop until reached the $1.05000 level, where sellers were jumping out of their trades. The price retraced back to the first resistance level at $1.05825.
The whole week was in a selling mode, demonstrating the weakness of euro and strength of the U.S. dollar
This coming week, we can expect a bit of retrace for EUR/USD following last week's strong selling pressure. The price is now at the strong support level—$1.05087—which has great impact on the daily, weekly and monthly level.
If we look at the monthly timeframe, we can see that this support level has stopped the price from falling further down. This time EUR/USD price is experiencing the same scenario.
Historically, when the price has reached this support level, it retraced back up for 200 pips. The retrace reached the $1.07825 resistance level, which we should take into consideration this time.
The $1.07825 resistance level is right on the confluence of resistance where we have a downtrend channel resistance line and horizontal resistance level.
Most likely the price will reach $1.06736 resistance or $1.07388 which should be the next target. $1.07388 was the week's highest target, which the price hit as it retraced from $1.06736.
But, in order to see the price moving upwards to these levels we need a daily candle close above the $1.05825 resistance level. Until that happens, we should avoid opening buy orders because the price has more free space to move down.
On the down side, we have $1.03920 strong support, the same support EUR/USD reached after breaking the $1.05087 support level.
The best thing to do is to wait and look for sell entries around $1.06736 as a potential reversal level, at which level sellers will push the price down.