EUR/USD Weekly Technical Outlook: Will the Euro Cooperate and Break 11500?
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EUR/USD Technical Highlights:
- EUR/USD on the verge of testing the all-important 11500 level
- A break will have the euro rolling downhill, while…
- A hold will bring further digestion, possible descending wedge
See what is driving EUR/USD on a fundamental basis and our intermediate-term techncial perspective in the DailyFX Q3 Euro Forecast.
The euro attempted to rally last week but quickly ran out of steam over 11700 and closed the week with the threat of breaking 11500 now very much alive. For those looking for momentum on existing shorts or a sound reason to enter short, 11500 is one of the bigger levels out there right now across any currency or market. For longs, a sustained break will be reason to abandon ship.
If a decline gains momentum, there aren’t any significant price levels to speak of. The size of the wedging pattern is around 300 pips, which implies a measured move to around 11200. But perhaps we see a quick head-fake dip under 11500 before reversing higher. The key will be to sustain below support on a daily closing basis if the euro is to make good on a breakdown.
A drop below support could come at any time, but we may first see another hold of support and further congestion. If 11500 stays firm then it may be more of the same; chop, chop, until either another attempt is made to break the big level or try and put together a rally. The chop could lead to a developed descending wedge, which for the patient trader may lead to an even better opportunity down the road as even more pressure builds...
Gotten a little off track? It’s happens to everyone, which is why we put together these 4 ideas to help rebuild your confidence.
EUR/USD Daily Chart (11500 = Big)
As per IGCS, traders were buying into last week’s decline and should this pick up as the euro passes through support then it could signal that a sustained break is on its way. For more details on sentiment and how it acts 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.