Euro Technical Outlook: EUR/USD Breakdown Aims For Multi-month Lows

Euro Technical Price Outlook: EUR/USD Weekly Trade Levels

• Euro updated technical trade levels & sentiment – Weekly Chart
• EUR/USD weekly reversal off confluence resistance eyeing initial support
• Critical support at 1.1445/86 – Key resistance at 1.1823/35

Euro marked a weekly reversal against the US Dollar with EUR/USD down more than 1.7% this week to trade at 1.1640 ahead of the New York close on Friday. The decline is now approaching initial support objectives and while the decline may be poised for a brief respite, the broader risk remains for a deeper correction in price. These are the updated targets and invalidation levels that matter on the EUR/USD weekly price chart. Review my latest Strategy Webinar for an in-depth breakdown of this Loonie technical setup and more.

Euro Price Chart – EUR/USD Weekly

Chart Prepared by Michael Boutros, Technical Strategist; EUR/USD on Tradingview

Notes:In my last Euro Weekly Price Outlook we noted that the, “recent Euro recovery is approaching the first major resistance zone and leaves the rally vulnerable here.” The level in focus was 1.1823/35- a region defined by the 61.8% Fibonacci retracement of the 2018 decline and the yearly high-week reversal close. Price briefly registered a high at 1.1880 before reversing lower with a break of the October opening-range fueling a decline of more than 1.8% off the monthly high.

The decline is now approaching initial weekly support at the 2016 swing high at 1.1616- be on the lookout for inflection off this region with the a close below needed to keep the focus on critical confluence support at the 2019 yearly open / 38.2% retracement / 100% extension at 1.1445/86. Weekly resistance steady at 1.1823/35 – we’ll continue to reserve this threshold as our bearish invalidation levels with a breach / close above needed to shift the focus higher in price.

Bottom line: Euro has reverse red off confluence downtrend resistance with the decline now approaching lateral support near the 1.16-handle. From a trading standpoint, a good zone to reduce short-exposure / lower protective stops- be on the lookout for inflection here with a break below needed to mark resumption of the September correction. Ultimately, a larger correction may offer more favorable entries closer to uptrend support. Review my latest Euro Price Outlook for a closer look at the near-term EUR/USD technical trade levels.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Euro Trader Sentiment – EUR/USD Price Chart

• A summary of IG Client Sentiment shows traders are net-short EUR/USD - the ratio stands at -1.25 (44.52% of traders are long) – weak bullish reading
• Long positions are2.76% higher than yesterday and 40.71% higher from last week
• Short positions are1.07% lower than yesterday and 30.51% lower 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 & compared with last week and recent changes in sentiment warn that the current EUR/USD price trend may soon reverse lower despite the fact traders remain net-short.

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Previous Weekly Technical Charts

• Gold (XAU/USD)
• Japanese Yen (USD/JPY)
• Australian Dollar (AUD/USD)
• British Pound (GBP/USD)
• Australian Dollar (AUD/USD)
• Canadian Dollar (USD/CAD)

--- Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex