The EURUSD has fallen for four consecutive days and has reached the 61.8% Fibonacci retracement of the most recent bullish rally in the daily view. This 61.8 retracement level is a very strong turning point in the FX markets. There is a chart attached to this article that shows that the EURUSD previously turned off the 61.8% Fibonacci retracement in the daily view which is drawn in darker green Fibonacci study. On the same chart I have drawn a second Fibonacci analysis in a lighter spring green, which is where we are currently. I have attached the daily pivot points for this last Friday, the weekly pivot points and the psychological levels surrounding the EURUSD. Notice that price stopped right at the daily S1 pivot point which corresponds with the midpoint psychological level 1.0650 (seen on the purple chart) and that price has blown through weekly S2, which shows how bearish the EURUSD currently is.
There is so much bearish momentum right now in the EURUSD that price may breach this 61.8 Fibonacci level without a problem and keep falling. However, historically this is a level to keep your eye on for market turning points. So, the behavior of price action at this level will be something to keep your eye on. If price stalls at this level and then creates a series of higher highs and higher lows, then there is a bullish trade to be made here. If price breaks the current price level at 1.0650 and keeps falling, then the bullish setup is invalidated obviously and I would then look at selling into the pullbacks to the upside as price continues to fall.
U.S. Dollar Analyst – Forex.Today