Euro Weekly Technical Outlook: EURUSD Downward Momentum Stalls at Support
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EURUSD Technical Outlook:
- Euro at an inflection point with volatile candlestick forming at support
- Long-legged Doji warns of a possible short-term low, but unconvinced yet
For the intermediate-term fundamental and technical outlook, check out the Q3 Euro Forecast.
Euro at an inflection point with volatile candlestick forming at support
Prior to the outcome of the ECB meeting on Thursday the Euro traded down to support above 11100, created by pair of lows back in April and May. The ensuing bounce and general volatility following the central bank meeting forged out a Long-legged Doji candlestick.
These candlesticks, with their long shadows (upper and lower wicks) and open and close in near proximity, indicate an inflection point; a push/pull struggle between both sides of the market without a ‘winner’. Given the candle formed at support it suggests we may see a bounce, but overall the trend is weak and any rally that develops may prove to be short-lived.
Overall, the picture is a little tricky from a tactical standpoint. Taking a countertrend trade may not prove to be a fruitful opportunity with resistance not far ahead around the Thursday high (11187), and on the flip-side shorting support (especially with the candle that formed) has little appeal from where I sit.
Traders may be best served next week sitting on the side-line until the picture clears up a bit. Keep in mind the FOMC decision on Wednesday, expect heightened volatility. To listen in live to the announcement, you can join Chief Strategist John Kicklighter on Wednesday, starting at 5:45 PM GMT time.
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 (Long-legged Doji at support)
EURUSD 4-hr Chart (Lines & Levels to Watch)
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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.