EUR/USD Weekly Technical Outlook - Euro Nearing a Breakout
EUR/USD Technical Highlights:
- Euro working towards a developed wedge
- 11500 remains an important floor
- A price move looks to be nearing
The euro continues to further itself along to seemingly nowhere as it fails to find enough sponsorship to hold a rally, but at the same time it is also failing to garner enough sellers to push it through major long-term support (top of 2015/16 range).
A pattern is becoming clearer by the day with a wedge beginning to come to light. It has symmetrical qualities at this time, however; it could still take on the form of a descending wedge if the late week rally fails and the 11500-threshold is thoroughly tested again. In either case, symmetrical or descending, the outcome could be all the same.
Taking a simpler view, as long as support holds in the 11500s it will remain an important floor, keeping the euro buoyed if not giving it a chance to rally. A little more price contraction and a topside breakout may lead to a squeeze as the market has grown somewhat complacent with a generally stronger dollar bias. On the flip side, the trend from the spring could quickly reassert itself with a break below 11500. The key is waiting for a breakout of a developed pattern.
With price coiling up, we are nearing a resolution, and likely quite soon (next couple of weeks). Situations of growing confusion though contracting price should have the opposite effect on market participants; that is, instead of lulling them to sleep traders should prep themselves for price expansion.
Gotten a little off track? It’s happens. Check out these 4 ideas to help rebuild your confidence.
EUR/USD Daily Chart (Wedge forming on big support)
As per IGCS, traders are nearly flat EUR/USD, but should we soon see a breakout look for that to skew in one direction or the other (increased longs = bearish, increased shorts = bullish), possibly building a case for continued momentum. For more details regarding sentiment and how it can act as a contrarian indicator, check out the IG Client Sentiment page.
EUR/USD IG Client Sentiment
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.