EUR/USD dropped sharply in yesterday's session as the US dollar index bounced back. Still, the pair remains bullish as long it stays above the 1.18 psychological level. Euro could decline deeper in the short term if the euro zone and German ZEW Economic Sentiment data will be worse than expected.
The pair has ended its corrective phase, so the bias is bullish. Its failure to develop a larger corrective phase signals an important growth. However, we need confirmation before going long.
EUR/USD Temporary Drop?
EUR/USD failed to break the 1.19 psychological level. Now is back within the extended sideways movement pattern. Yesterday's bearish engulfing pattern signals strong sellers around the 1.1880 - 1.1900 area.
Technically, a valid breakout above 1.19 suggests buying as EUR/USD should jump way higher in the upcoming period. Consolidating above the 1.18 could attract more buyers again, the retreat will be over if the US dollar index drops again.
- EUR/USD Trading Conclusion
Buy a bullish closure above the 1.19 level and use an immediate upside target at the 1.2 psychological level. Also, another false breakdown with great separation below 1.18 or a major bullish engulfing here could represent a long signal.
Dropping below 1.18 and under the Pivot Point (1.1788) signals a deeper drop towards the 1.17 level. Personally, I believe that only a valid breakdown below 1.1611 will really bring a great selling opportunity.
