EURUSD - Will the parallel channel hold?Introduction
The EURUSD is currently trading within a well-defined bullish parallel channel. While this channel suggests an overall upward trajectory, there is an important imbalance in how price has interacted with its boundaries. The upper side of the channel has relatively few touchpoints compared to the lower side, which has already been tested multiple times. This creates an interesting dynamic where both bullish and bearish scenarios remain in play. The pair is also trading within two significant 4-hour fair value gaps (FVGs), and the critical question now is which side will give way first, determining the next directional move.
The Parallel Channel
Within this parallel channel, price action has been leaning more heavily toward the downside, as shown by the fact that the lower boundary has been tested four times already. The upper boundary, however, has only registered a single touch, making it less validated. This imbalance implies that there is notable pressure on the downside, but at the same time, the presence of a bullish 4-hour fair value gap near the lower boundary cannot be ignored. This gap provides a potential level of support that could initiate a reversal back toward the upper side of the channel.
Potential Bullish Bounce from Support
The alignment of the lower trendline of the channel with the 4-hour bullish fair value gap creates a strong technical confluence. This support zone, located around the 1.166 – 1.165 area, could act as a springboard for buyers. If price respects this level, a bullish bounce could occur, pushing EURUSD back toward the upper region of the channel. In this scenario, the market would likely target the remaining inefficiencies left by the bearish 1-hour and 4-hour fair value gaps above, potentially leading to a liquidity grab in that zone.
Bearish Breakdown Scenario
On the other hand, if EURUSD fails to hold the support at the bullish 4-hour FVG, a bearish breakdown becomes increasingly likely. In that case, both the channel structure and the previously supportive FVG would flip into resistance, reinforcing bearish momentum. Should this play out, the pair could decline toward the next major 4-hour FVG around the 1.156 level in the near future. This would represent a meaningful breakdown of the current bullish structure, opening the door for further downside.
Conclusion
The EURUSD sits at a decisive point within its bullish channel. The key lies in whether the support confluence of the 4-hour bullish FVG and the lower trendline will hold. If it does, the pair has room to climb higher and fill inefficiencies above. If it breaks, however, a move down toward 1.156 seems likely. Traders should closely monitor these zones, as the resolution of this consolidation will determine whether EURUSD extends its bullish momentum or shifts into a deeper retracement.
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