EURUSD Weekly Technical Outlook: Euro Testing Resolve of Shorts
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EURUSD Technical Highlights:
- Euro breaking trend-line from March
- Further strength will bring into play another set of trend-lines
- Ascending wedge could develop before making a meaningful move
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EURUSD is trying to break higher, but has obstacles
The Euro is currently making a run above the trend-line extending down from the March high, giving the single-currency some renewed life. A climb, however, will be needed above the May 1 reversal-day high before further upside can develop.
If we see EURUSD turn down from around this month’s high a broader ascending wedge (most easily visible on the 4-hr chart) could come to form nicely. This pattern suggests further price appreciation with the higher lows marking increased strength. But we will need to see a breakout as these patterns can resolve themselves in either direction.
Whether a climb above the May 1 happens straight-away from here or from an ascending wedge, it wouldn’t be long before the Euro runs into difficulties again. From the February and September peaks of last year there are a pair of trend-lines running in confluence near 11300. Just above there lies the swing-high from April at 11324. All this combined will make for a tough test and also doesn’t leave much room from current levels.
In the event an ascending wedge develops and the underside trend-line of the pattern is broken, watch for a test of last month’s lows around 11110 or worse. Declines (and rallies) have been met with opposition, though, so don’t look for big momentum at this time. This makes profit-taking on positions prudent on any meaningful swing in price.
Check out the IG Client Sentiment page to find out how changes in positioning in major markets could signal the next price move.
EURUSD Daily Chart (trend-line resistance not far ahead)
EURUSD 4-hr Chart (Ascending wedge building)
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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.