Forex Strategy: EUR/USD Lacks Bullish Signal Putting Doubt on Recovery
- EUR/USD Technical Strategy: Pending Short
- Recovery may be limited with bullish reversal signal missing
- Evening Starformation on the weekly offers ominous warning
EUR/USD continues to gain ground in early European trading as the pair advances towards the critical 1.3800 handle. However, traders should be wary of the potential for the recovery in the Euro to stall, given that prices remain in a short-term downtrend on the daily, and a bullish reversal signal is notably lacking.
EUR/USD: Bounce May Be Limited With Downtrend Intact
Daily Chart - Created Using FXCM Marketscope 2.0
An examination of intraday price action on the four hour chart reveals a noteworthy break above resistance at 1.3750 which now forms support for the pair. An extended run by the bulls is likely to be met by selling pressure around the 1.3800 level.
EUR/USD: Breaks 1.3750 With Sellers Likely Sitting At 1.3800/5
4 Hour Chart - Created Using FXCM Marketscope 2.0
Finally, taking a look at some broader context provided the weekly chart; the Evening Star formation that has emerged shy of the key 1.4000 is a notable warning signal of further declines ahead. The pattern has received confirmation from a successive down week which raises the likelihood of an eventual correction towards the 1.3480 support level.
EUR/USD: Evening Star Receives Confirmation
Weekly Chart - Created Using FXCM Marketscope 2.0
By David de Ferranti, Market Analyst, FXCM
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.