EURUSD Technical Highlights:
- Euro momentum stalling around resistance, suggests next move is down
- General trend favors more weakness from here or just a bit higher
Check out the Euro Q1 Forecast to see our analysts’ intermediate-term fundamental and technical outlook.
Euro momentum stalling around resistance, suggests next move is down
The Euro’s bounce from near the November low looks to have run its course with momentum having stalled since Wednesday. Upward momentum fizzled out upon an attempt to cross over the lower parallel in place since November, with the 4-hr chart showing the makings of a corrective wedge.
The downward trend, resistance, and price action combine to suggest EURUSD is headed lower in the days ahead. If this is the case, first up will be the recent low at 11234, followed by the November low at 11216. At the rate things have been going lately, it could be a stretch that we see an extended slide too far beyond either of those levels without another bounce.
The more likely scenario appears to be for weakness from current levels, but alternatively if buying pressure comes in and pushes the Euro past last week’s high, it will still have a difficult time sustaining loftier levels as both trend structure and a trend-line from last month work against the Euro.
Volatility will return but until it does we need to continue to respect the current environment and take it for what it is. Given the historical extremes in low volatility, a resurgence in price swings won’t be a one-week event, but rather a material regime change that will last for a significant stretch of time. The bottom line is that if volatility suddenly sneaks up on us there will be plenty of time to change gears and take advantage of it without trying to spend too much time trying to anticipate its arrival.
Traders are long EURUSD, see the IG Client Sentiment page to find out how changes in positioning can act as a signal for price direction.
EURUSD Daily Chart (Resistance, momentum faltering)
EURUSD 4-hr Chart (corrective wedge forming)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
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