Euro Price Outlook: EUR/USD Drops into Trend Support– Trade Levels
- Euro plummets into initial support hurdles- Focus is on reaction around 1.0994
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Euro has plummeted more than 1.5% against the US Dollar since the multi-month October highs with the decline now approaching the first major support hurdle. Last week’s decline marks the largest single weekly loss since August but leaves the immediate short-bias vulnerable heading into the close of the week while above this level. These are the updated targets and invalidation levels that matter on the EUR/USD price chart. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Sterling price setup and more.
Euro Price Chart – EUR/USD Daily
Technical Outlook: In my latest Euro Price Outlook we noted that EUR/USD, “remains vulnerable into the open of the month of the back of this reversal but ultimately, we’re looking for a larger setback to offer more favorable entries.” Price is now approaching key Fibonacci support at the 61.8% retracement of the October advance at 1.0994- a break / close below this threshold is needed to keep the immediate short-bias viable. Such a scenario would shift the focus towards the yearly low-day close at 1.0932. Key daily resistance stands at the upper parallel / September high at 1.1109.
Euro Price Chart – EUR/USD 120min
Notes: A closer look at Euro price action shows EUR/USD trading within the confines of a descending pitchfork formation extending October / November highs with price testing the lower parallel early in the week. Note that the trendline converges on the 61.8% retracement and further highlights near-term support at 1.0994- looking for a reaction here.
A break below this threshold exposes the low-day close / 78.6% retracement at 1.0932/43. Initial resistance stands with the 25% parallel backed by the weekly opening-range highs at 1.1043- a breach / close above this threshold is needed to invalidate the short-side with such a scenario exposing 1.1065 and the upper parallel / 1.1107/09.
Why does the average trader lose? Avoid these Mistakes in your trading
Bottom line: The Euro sell-off is approaching the first major support hurdle at 1.0994. From a trading standpoint, a good spot to reduce short-exposure / lower protective stops. Be on the lookout for possible downside exhaustion into this region with a breach above the weekly range highs needed to shift the focus higher again. Use caution here – this is a big level and a break lower from here would likely see accelerated losses for Euro. Review my latest Euro Weekly Price Outlook for a closer look at the longer-term EUR/USD technical trading 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 +1.45 (59.16% of traders are long) – weak bearish reading
- Long positions are 8.22% higher than yesterday and 21.94% higher from last week
- Short positions are5.96% lower than yesterday and 8.32% 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 Euro retail positioning are impacting trend- Learn more about sentiment!
Key Euro / US Data Releases
Economic Calendar - latest economic developments and upcoming event risk.
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- Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.