EUR/USD Weekly Technical Forecast: Euro Hanging onto Breakout by a Thread
EUR/USD Technical Highlights:
- Euro finally broke free from congestion, but…
- Barely holding onto the top of the range
- A drop back inside the range reverses bias to neutral to negative
Check out the recently released Euro Q1 Forecast to see our analysts’ intermediate-term fundamental and technical outlook.
Euro finally broke free from congestion, but…
Early last week the Euro broke free from the trading range that kept it at a standstill since late October, but by week’s end it was clearly at risk of failing to make good on the breakout. If EUR/USD can stay above the range, though, it has room to run.
In the event the return to the top of the range turns out to be only a retest, first up as resistance beyond last week’s high is the 200-day at 11632. Given the moving average doesn’t have any significant price resistance in confluence, it is only viewed as minor resistance at this time. The first big area of price resistance doesn’t arrive until around the 11800-level from September.
If the Euro falls back inside the range, then at the very least it puts the currency back into choppy trading mode and possibly sparks a reversal through the bottom of the range. From a tactical standpoint, for now running with a bullish trading bias for as long as the top of the range holds.
The other day I discussed Euro volatility and how it is pointing to larger price swings to come. We may be on the cusp of that with the range having been broken, even if the euro does fail back inside. The fact we are seeing some movement outside of the multi-week range suggests the market is starting to warm up for a bout of heightened volatility. Be patient, one way or another, the Euro will eventually find a trade-able trend.
EUR/USD Daily Chart (Looking to build on breakout)
---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at@PaulRobinsonFX
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