In today's analysis, let's dive into the dynamics of EURUSD, the cornerstone of the forex market. Currently, EURUSD finds itself at a critical juncture as it tests a pivotal horizontal resistance level. After a robust session yesterday, today's retreat holds significance as it unfolds precisely at this crucial juncture.
Zooming in on the daily chart unveils a prominent head and shoulders pattern, highlighted in yellow. The resistance being tested corresponds to the neckline of this formation, distinctly marked in orange. The recent breakout below this neckline served as a clear signal to sell.
Now, as the price encounters this resistance once more, a bounce off it would affirm the validity of the sell signal. The confirmation of this signal hinges on the price's ability to sustain below the orange resistance zone.
The ongoing tug-of-war between buyers and sellers underscores the importance of this level. Sellers are keen on keeping the price below the orange resistance, while buyers are eyeing a breakout. Should the price manage to close above this level, it would signal a potential shift in momentum, albeit with limited probability at present.