With Donald Trump strongly favored to win the 2024 U.S. elections, the dollar is gaining significant strength across the board. In focus today is EUR/USD, where all eyes are on one crucial technical indicator: the black uptrend line, which has been a defining level of support since October 2023.
This uptrend line, connecting higher lows from October 2023, April, June, and October 2024, has consistently acted as a pivot point for EUR/USD. The trendline has signaled bullish strength in past months, with each bounce confirming an ongoing uptrend. However, recent market reactions—fueled by the potential Trump win—have led to a dramatic sell-off, resulting in a sizable bearish candle that now threatens to break through this key support.
Implications of a Breakout If the current momentum leads to a daily close below this black uptrend line, we would have a confirmed breakout—a definitive signal to sell. A close below this line would not only signal a change in market sentiment but also open the possibility for further downward movement, as traders would view this as a breakdown of long-standing support and a possible entry into a new bearish phase for EUR/USD.
Alternative Scenario: The False Breakout Alternatively, should the price rally back above the black uptrend line by the day’s close, this would negate the bearish breakout and suggest a false breakout pattern. This could trigger a reversal, signaling a potential buy setup and indicating that the market remains resilient despite dollar strength. In this case, buyers may view the line as still-valid support, and EUR/USD could potentially see bullish momentum reemerge.