EUR/USD Price Analysis: Euro Testing 1.13 – Is Relief in Sight?

2018-08-15 18:14:00 Michael Boutros

What's on this page

EUR/USD Daily Price Chart
EUR/USD 240min Price Chart
EUR/USD Trader Sentiment
Relevant EUR/USD Economic Data Releases
Other Setups in Play

Euro testing near-term structural support- threat for recovery while above 1.1275
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Euro is trading into fresh yearly lows today with price now testing key near-term support objectives. Here are the updated targets and invalidation levels that matter on the EUR/USD charts. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

EUR/USD Daily Price Chart

Technical Outlook: In my Weekly Technical Perspective on Euro we noted that EUR/USD was, “testing a make-or-break level” early in the month with a close below 1.16 to risk substantial losses. Price is down more than 3% month-to-date with the pair responding to slope today in US Trade. We’re on the lookout for possible exhaustion at these levels with the broader short-bias vulnerable near-term while above 1.13.

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EUR/USD 240min Price Chart

Notes: A closer look at crude price action further sees Euro posting a 4-hour outside-reversal bar off confluence support at 1.1312 where the July 17th swing low converges on slope support extending off the May lows. Long-term structural support rests just lower around~1.1274–price is vulnerable for a near-term recovery off one of these levels.

Interim resistance stands at 1.1366 with near-term bearish invalidation now lowered to 1.1448- a breach above this level would be needed to suggest a more significant low is in place. A downside break sub-1.1274 keep the focus on the key 1.1164/86 support target – a region defined by the 61.8% Fibonacci retracement of the 2017 advance and the measured move of the June / July consolidation break.

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Bottom line: The immediate short-bias is vulnerable heading into these support targets with a breach above 1.1448 needed clear the way for a larger recovery. From a trading standpoint, look to reduce short-exposure / bring in protective stops here and be on the lookout for signs of price exhaustion (note we’re already marking divergence into these lows). Keep in mind we get the final read on July Eurozone CPI figures tomorrow.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

EUR/USD Trader Sentiment

A summary of IG Client Sentiment shows traders are net-long EUR/USD - the ratio stands at +1.46 (59.3% of traders are long) – weak bearish reading
Traders have remained net-long since August1st; price has moved 2.9% lower since then
Long positions are 0.6% lower than yesterday and 3.3% higher from last week
Short positions are 5.3% lower than yesterday and 13.0% lower 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. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger EUR/USD-bearish contrarian trading bias from a sentiment standpoint.

See how shifts in EUR/USD retail positioning are impacting trend- Learn more about sentiment!

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