EUR/USD Testing Parity

Published 07/11/2022, 09:34 AM

EUR/USD Daily Chart

  • The EUR/USD broke below the May to June trading range and the 2017 low last week.
  • The bear breakout is probably strong enough to lead to a second leg down.
  • At the moment, the EUR/USD is in an 11-bar bear micro channel which is climactic behavior and increases the odds of a pullback soon.
  • As big as the bear breakout is, the odds are the market will get back to the 2017 low. Some bulls bought the 2017 low and were willing to scale in lower.
  • Right now, the market is deciding if it will have to test 1.0000 before it tests the 2017 low.  At the moment, I think the odds slightly favor a bounce and test of the 2017 low before the market test of 1.0000, which is near a 20% correction.
  • Also, 1.0000 is a big round number, so there will likely be buyers above seeing 1.0000 as a great value opportunity to buy. These are the same value investors that were happy to buy the E-mini at a 20% correction.
  • If 1.0000 is a great value buy, why would bulls be willing to buy before the considerable round number? That is because bulls might be worried about not getting filled, so they will be happy to buy 50 – 100 pips above the 1.0000 big round number.
  • Bears still have a possible double top measured move projection from the May 30 high to the May 13 low that projects down to the .9913 price level. While I do not think the market will get there (for above reasons), it is possible that the market vacuums down to it before there is a reversal.  

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