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EUR/USD Technical Highlights:

  • Euro sell-off halted right around 11300 support
  • Late-week bounce has confluent resistance in focus
  • It’s a battle between relatively tight levels

For the intermediate-term fundamental and technical view, check out the DailyFX Q4 Euro Forecast.

Euro in conflict to start the week

On Thursday, EUR/USD traded down to 11302, just a pip above the August low and a handful of pips away from the U.S. presidential-election day high that gave meaning to the area immediately surrounding 11300. While this is considered a steadfast level of support to bounce from, immediate resistance threatens any climb from here.

On Friday the advance was stopped in its tracks upon trading up into a pair of short-term lows created during October. In addition to these lows there is trend-line resistance from the peak in September, as well as the underside of a trend-line dating back to December 2016. All of this in conjunction with a generally weak trend makes for a tough ride higher.

Tactically, trend and resistance are in favor of shorts, however; the strong bounce off a big support level gives pause as to whether a move lower is sustainable. This makes for a somewhat difficult proposition, as has often times been the case with the Euro in recent months.

Would-be shorts looking for an extended leg lower could use Friday’s swing high (11456) as a point of reference for stops. A drop down to 11300 will be big again. It would be unsurprising to see it hold on another test given its significance. But this also means that if it doesn’t hold then look for selling to accelerate, and possibly in a major way.

Trade above Friday’s high will open up a little room, but just a little as the aforementioned 11500 level will be only a stone’s throw away. For now, confidence level in either direction isn’t particularly high, but leaning more bear than bull…

Check out this guide with four ideas on how to Build Confidence in Trading

EUR/USD Daily Chart (Resistance and trend negative)

EUR/USD Weekly Technical Outlook: Euro in Conflict as New Week Arrives

EUR/USD IG Client Sentiment

EURUSD CLIENT POSITIONING

As per IGCS, retail traders were quite long into the most recent down-move but unwound a big chunk of their positioning into the late-week bounce. It is unclear at this time what further signaling will come from sentiment. For more details on the sentiment model and how it can act as a contrarian indicator, check out the IG Client Sentiment page.

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter at@PaulRobinsonFX

Other Weekly Technical Forecast:

Australian Dollar Forecast: AUD/USD, AUD/JPY 2018 Downtrend Under Fire. EUR/AUD Price at Risk

British Pound Forecast: GBPUSD has Mildly Supportive Charts

US Dollar Forecast: Dollar's Breakout Effort Falls Apart and Elections Volatility is Underpriced

Equity Forecast: Technical Forecast for Dow, S&P 500, FTSE 100, DAX and Nikkei