EUR/USD is presenting a 400 pips downside potential after the price bounced off the resistance

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Updated: 13 November 2020

Hello traders! The EUR/USD has found the top near the key psychological level, which is 1.2000. Then the price went down, testing 1.6000 support area, where currently there is a double bottom. But on the other hand, while correcting up, EUR/USD has reached and cleanly rejected the 61.8% Fibonacci support at 1.1859. The daily close was right at this level, showing that bears are defending the 1.1860 resistance area.

At this resistance, a double top has been formed, because the price has attempted to break above 1.1859, but only managed to produce a spike above, without no confirmed close higher this level.

It could be that as long as the1.1920 recently printed high holds, EUR/USD is about to initiate a strong downtrend. It might result in a 400 pip price decline because the key support is located at 1.1400, which is confirmed by 88.6% Fibonacci retracement level as can be seen on the chart. Besides, this support corresponds to the 200 Exponential Moving Average as well as the simple uptrend trendline.

On the upside potential, only a break above the 1.1920 will invalidate this bearish forecast and a long-term uptrend should be expected to continue. Or at the very least EUR/USD will target 1.2000 critical resistance once again.

Bias: Strongly bearish while below 1.1920

Potential Resistance Zone: 1.1880 – 1.1920

Potential Targets: 1.1400

Have a profitable trading!