The EURUSD price remains in a consolidation however the USD Index at resistance could give us a clue to what happens next for the major currency pair.
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The price of the EURUSD is still in a consolidation stage currently and looks to remain in it until something changes. When trading EURUSD it’s important to watch the USD Index as it is the inverse to that market. The current price of the USD Index is at the 2020 and 2017 highs which could see a reversal form. Not only this but the strength meter for this week showed the EURO gaining against the majority of the other currencies.
As the USD Index approaches the major highs we could begin to look for reversal patterns to form. One pattern that could form here is a common reversal opportunity when the price breaks out of a range, falls back within it and trades to the other side. This is a strong reversal pattern which would see the price of EURUSD break through the current lows, entice short selling and then rally back to close within the range for a reversal opportunity.
The reason these patterns are so powerful is because it sees people that are trading the breakout exit positions quickly as the price comes back to the range in fear of a reversal which only adds to the buying momentum.
Do you use supply and demand zones? in our previous video we show you how to identify them. You can view it here.
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