EUR/USD: Down But Not Yet Out

2017-03-29 16:36:00

Talking Points

EURUSD Reversal off key resistance to offer favorable long-entries
Updated targets & invalidation levels
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EURUSD Daily

Technical Outlook: EURUSD reversed sharply off key resistance early this week at 1.0872-1.0908 – this region is defined by the November high-day close, the June lows, the 2016 open and the 200-day moving average. Note the accompanying break of a support-trigger in daily RSI further highlight’s the risk for continued weakness near-term. Key support targets are eyed at 1.0690-1.07 backed by 1.0623/50 (bullish invalidation) – both zones of interest for near-term exhaustion / long-entries. Interim resistance is eyed at 1.0817/20 with a breach / close above 1.09 targeting subsequent topside objectives at 1.0930/36 & 1.0984.

EURUSD 240min

Notes: A closer look at price action highlights a break of the weekly open / opening range lows yesterday, shifting the near-term focus lower. The pair is now testing interim support at 1.0749 with a break lower targeting the aforementioned levels of interest. A quarter of the daily average true range (ATR) yields profit targets of just 19-23 pips per scalp.

Added caution is warranted heading into the close of the week / month / quarter with the release of Eurozone & German CPI numbers also likely to fuel increased volatility in the EUR crosses. From a trading standpoint, I’ll be looking for a move lower into the lower parallels to offer favorable long-entries targeting a breach of the 1.0872-1.0908key resistance threshold.

A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are short EURUSD- the ratio stands at -1.93 (34% of traders are long)- bullish reading
Retail traders have remained net-short since Mar 15 when the pair was trading near 1.06116- price has moved 1.9% higher since then.
Long positions are 23.7% higher than yesterday and 34.0% above levels seen last week
Short positions are 2.9% lower than yesterday and 8.9% below levels seen last week
While the current SSI profile continues to point higher, it’s worth noting that the recent build in long positions suggest traders are attempting to fade this near-term decline and leaves the immediate risk lower. Ultimately, we’ll be looking for a new low to get long.

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Relevant Data Releases