EURUSD Weekly Technical Forecast: Euro Flirting with Support Break
EURUSD Technical Highlights:
- Euro seeing limited sponsorship around important support
- Change in character from before may be sign of momentum to come
Check out the Euro Q1 Forecast to see our analysts’ intermediate-term fundamental and technical outlook.
Euro seeing limited sponsorship around important support
Heading into last Monday, given the way the Euro has traded in recent months in this low volatility environment, the expectation was for a bounce from support instead of slicing on through. The bounce on Tuesday started to look like other prior lows in recent months, but the final days of the week began to demonstrate a change in character
The fact that EURUSD is struggling to bounce after selling off and hitting support suggests that sellers are growing in number and that a breakdown of meaning could be just around the bend. As long as price on a closing basis stays below the weekly high at 11341, a neutral bias at the least will be intact.
A drop below 11215, the November low, will leave behind the support we saw hold last week and have the worst levels since June 2017 in play. As discussed on numerous occasions in recent weeks, Euro volatility is very low and due for a pop. A break of key support levels may do the trick in the days ahead.
If the November low breaks, next up is support by way of 11119 and the underside trend-line from November 2017. This could certainly quash any excitement of real momentum coming in, but if that can’t hold along then there isn’t much in the way of visible support for a good way lower.
All-in-all, price action is showing signs of changing from the recent norm, which should have traders on higher-than-normal alert for momentum to develop. It could be another false signal, but then again it might not, and as the saying goes, ‘chance favors the prepared mind.’
Traders are long EURUSD by a good amount, see the IG Client Sentiment page to find out how changes in positioning can act as a signal for price direction.
EURUSD Daily Chart (Breakdown could be very near)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at@PaulRobinsonFX
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