EUR/USD Weekly Technical Outlook: Is the Euro ’There’ Yet?
- EUR/USD is trading around an important long-term trend-line
- Price action last week suggests a turnaround could be at hand
- Technical levels, lines highlighted on several time-frames
Is the euro there yet; that is, has it arrived at a point where it could undergo a correction, or worse? It’s certainly in an area where a turnaround could develop. There is a trend-line running down from the top in 2008, clocking in around the current vicinity to a little higher.
For a time-frame this long, you need to pull out the monthly chart and use a crayon versus a pencil to draw the trend-line. When you look at this way, then EUR/USD is trading up against a critical spot near the 12600-handle.
Chart 1 – EUR/USD: Monthly
On Thursday, we saw a strong key-reversal bar carved out. If the high of the candlestick at 12537 isn’t soon overcome, look for the euro to begin trading lower in the days ahead. These types of powerful reversals tend to lead to turnarounds fairly quickly, however; in the event EUR/USD moves sideways, with each passing day, the likelihood increases that we’ll see a breakout above.
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Chart 2 – EUR/USD: Daily
From a tactical standpoint, for the first time in a while shorts could gain the upper-hand starting this week. Turning to the 4-hr looking for support, there is a trend-line rising up from earlier in the month, which is in approximate confluence with the Thursday low of 12364. Below there, the next eyed support arrives around a small zone surrounding 12300; the top of the triangle prior to the most recent leg higher.
Chart 3 – EUR/USD: 4-hr
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---Written by Paul Robinson, Market Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.