Euro Price Outlook: EUR/USD Breakout Fails at Resistance- Reversal?
- EUR/USD pulling back from initial resistance hurdle- looking for support ahead of 1.0975
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Euro is down more than 0.8% against the US Dollar this week with EUR/USD trading at 1.1080 ahead of the New York close on Friday. The pullback from resistance may have further to go but we’re looking for support / entries after last week’s price breakout. These are the updated targets and invalidation levels that matter on the EUR/USD charts this week. Review this week's Strategy Webinar for an in-depth breakdown of this Euro price setup and more.
Euro Price Chart – EUR/USD Weekly
Notes:In my last Euro Weekly Price Outlook we noted that EUR/USD had, “broken out and the rally remains viable while above former slope resistance. From at trading standpoint, look to reduce long-exposure / raise protective stop on a stretch towards 1.1187-1.1208 – look for a bigger reaction there IFreached.” Euro registered a high this week at 1.1080 before turning with weekly momentum failing at the 50-threhsold.
The focus from here is the pullback – IF Euro is indeed heading higher, losses should be limited to confluence support at the yearly low- week close / 61.8% retracement at 1.0976/94 (area of interest for possible exhaustion / long-entries). Key near-term resistance remains at 1.1186-1.1208 with a topside breach / close above targeting the highlighted trendline confluence around the 1.13-handle – look for a bigger reaction there IF reached.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom line:The Euro breakout is testing the first resistance hurdle here and leaves the immediate advance vulnerable heading into next week. From a trading standpoint, look for downside exhaustion ahead of 1.0976/94 for possible long-entries – ultimately, targeting a topside breach of this week’s high. A break below 1.0854 would be terminal with such a scenario exposing the 2017 uncovered close at 1.0725. I’ll publish an updated Euro Dollar Price Outlook once we get further clarity on the near-term EUR/USD technical trading levels.
Euro Trader Sentiment – EUR/USD Price Chart
- A summary of IG Client Sentiment shows traders are net-short EUR/USD - the ratio stands at -1.3 (43.48% of traders are long) – weak bullish reading
- Long positions are 0.26% lower than yesterday and 6.31% higher from last week
- Short positions are2.16% lower than yesterday and 1.89% higher from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/USD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current EUR/USD price trend may soon reverse lower despite the fact traders remain net-short.
See how shifts in Euro retail positioning are impacting trend- Learn more about sentiment!
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--- Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.