Euro Short-term Technical Outlook: EUR/USD Powers Towards Parity
Euro Technical Price Outlook: EUR/USD Short-term Trade Levels
- Euro updated technical trade levels – Daily & Intraday Charts
- EUR/USD rally off key support approaching yearly downtrend resistance- inflection risk
- Support 9850, 9782 (key), 9701– Resistance 9945, 1.0000 (key), 1.0121
Euro has surged more than 4.2% off the yearly lows with a rebound off key technical support now approaching yearly downtrend resistance early in the month / quarter. This is the first major test for the EUR/USD recovery and we’re looking for a reaction in price for guidance into the close of the week with US Non-Farm Payrolls (NFP) on tap. These are the updated targets and invalidation levels that matter on the EUR/USD technical price charts. Review my latest Strategy Webinar for an in-depth breakdown of this Euro technical setup and more.
Euro Price Chart – EUR/USD Daily
Technical Outlook: In last month’s Euro Short-term Price Outlook we noted that EUR/USD had, “reversed at a critical resistance confluence and the threat remains for a deeper plunge while below 1.0175.” The highs held with a late-month plunge taking Euro into a critical support zone at the 1989 low / 2001 high at 9548/95. The recovery off this threshold is in focus heading into the October open with price now probing former slope support as resistance early in the week with the yearly downtrend just higher- looking for a reaction there IF reached.
Euro Price Chart – EUR/USD 120min
Notes: A closer look at Euro price action shows EUR/USD trading within the confines of a short-term ascending pitchfork formation extending off the September lows with the upper parallel further highlighting resistance into parity. A topside breach / close above this threshold is needed to suggest a more significant recovery may be underway with such a scenario exposing the September high-day close at 1.0121 and the September highs near the 1.02-handle. Initial support now back at 9850 backed by the near-term bullish invalidation at the objective weekly / monthly open at 9782. Ultimately a break / close below the median-line / June 2000 high at 9701 would be needed to mark resumption of the broader downtrend back towards the 9548/95 key support zone.
Bottom line: A rebound off critical support in EUR/USD is now approaching yearly downtrend resistance into the start of the month / quarter – looking to possible exhaustion / price inflection in the days ahead for guidance. From at trading standpoint, look to reduce long-exposure / raise protective stops on a rally towards parity. Losses should be limited to the weekly open IF price is heading higher on this stretch. Review my latest Euro Weekly Price Outlook for a closer look at the longer-term EUR/USD technical trade levels.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Euro Trader Sentiment – EUR/USD Price Chart
- A summary of IG Client Sentiment shows traders are net-long EUR/USD - the ratio stands at +1.38 (57.98% of traders are long) – typically weak bearish reading
- Long positions are 2.43% lower than yesterday and 25.14% lower from last week
- Short positions are 7.80% higher than yesterday and 55.93% higher from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/USD prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. From a sentiment standpoint, the recent changes in positioning warn that the current EUR/USD price trend may soon reverse higher despite the fact traders remain net-long.
Euro / US Economic Calendar
Economic Calendar - latest economic developments and upcoming event risk
Active Technical Setups
- Gold Price Short-term Outlook: Gold Returns to Resistance- Can Bulls Break?
- Japanese Yen Short-term Technical Outlook: USD/JPY Rally Vulnerable
- Written by Michael Boutros, Technical Strategist with DailyFX
Follow Michael on Twitter @MBForex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.