Talking Points
- EURUSD Brexit rebound approaching initial resistance targets
- Updated targets & invalidation levels
EURUSD 240min
Technical Outlook: Euro has continuedto trade within the confines of a well-defined descending median-line formation extending off the yearly high. The Brexit fallout fueled a brief break below parallel-support last week with this week’s opening range low reversing precisely off a sliding parallel extending off the 4/14 low (red). The pair has now filled the Sunday gap to complete a 61.8% extension off the Brexit low at 1.1127. Note that the monthly open comes in at 1.1129.
Heading into tomorrow’s CPI release, the focus remains weighted to the topside while above the weekly open at 1.1010 with a breach higher targeting the 50% retracement at 1.1170 and a more significant Fibonacci confluence at 1.1224/31- (area of interest for near-term exhaustion / short-entries). A break below the weekly open puts the focus back on parallel support & the 2016 open at 1.0872. Keep in mind tomorrow marks the end of the month / quarter and could fuel added volatility into the close. Continue tracking this setup and more throughout the week- Subscribe to SB Trade Deskand take advantage of the DailyFX New Subscriber Discount.
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- A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net short EURUSD- the ratio stands at -1.23(45% of traders are long)-weak bullishreading
- Yesterday the ratio was -1.14; Short positions are 8.7% higher than yesterday but 3.8%below levels seen last week
- An extreme of -2.67 was registered just one day before the May high – Short interest has been building since the Brexit vote (brief flip to net long at the low), keeping the focus higher in Euro
- Open interest is 5.2% higher than yesterday but 17.7% below its monthly average. Note that this build in open interest pushed SSI deeper into negative territory suggesting that these positions are new shorts being put on (as opposed to position squaring- bullish)
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Relevant Data Releases This Week
Other Setups in Play:
- The Brexit Aftermath – Technical Outlook into the Month/Quarter Close
- NZD/CAD Longs at Risk on Approach of Key Resistance at 9200
- USD/CAD Approaching Initial Support Targets Ahead of Retail Sales
- AUD/USD: RBA Minutes, Fed Testimony to Offer Long Entries
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---Written by Michael Boutros, Currency Strategist with DailyFX
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