In Forex we have a certain market dynamic due to the fundamentals and the players in the market. I won't go into detail that much here but will definitely explain it on my website when launched next month.
Nevertheless this results in important levels that the market tend to retest several times. I am not debating whether or not exists since that is not relevant the way I trade. However what is important to me is price action around these zones and what is next.
The Euro has the tendency to test 50% of the previous swing, there are fundamental reasons for this. In my previous post I showed that the daily time frame already tested this level. I believe that the current consolidation/correction on the 4 hour time frame is nothing more than the market prepare itself to break that zone.
In terms of trading the next things are relevant to me:
After the momentum in the EURUSD we saw 1.08 zone tested several times and price is unfolding in the shape of a Bull-Flag pattern and therefore (among other reasons) corrective to me.
At the moment we see the EURUSD test this zone once again.
The following scenario's are; we either see a break lower followed by a retest and continuation lower to test 1.70. In this case I let it go and let the structure complete itself.
Second scenario is that the EURUSD finds a kind of intra day bottom followed by a retest of the upper channel line. I like to see a break of this channel for a possible Buy. To understand what I'm looking for once we see the break have a look at my previous posts by means of the link I mentioned above.