EUR/USD Watches French Election from 1.10
EURUSD finishes a strong week on its highs. It is speculated that hedges were removed as the French election nears and while Macron maintains a steady lead over Le Pen. Regardless of the reason, we look to the Elliott Wave pattern to help us identify higher probability patterns.
The EUR/USD advance is facing three technical hurdles. First, it currently sits on a trend line stretching back 12 months.
Secondly, the 61.8% retracement of the previous impulse is at 1.1001.
Thirdly, circle wave y is 1.618 times the distance of circle wave w. This is one of the common wave relationships regarding the distances of alternating waves.
Relative Strength Index is another tool warning that the advance is mature and momentum is slowing. Due to these multiple tools pointing to a similar price level, the potential for a price reaction lower is elevated.
A break below support near 1.0880 may be an early warning signal that prices may revisit the grey trend line near 1.0650. A material break above 1.10 opens the door to the US election high near 1.14.
Sentiment has slightly shifted towards more net bulls and currently prints -1.83. Earlier this week, sentiment was -2 so this shift is a subtle clue about the potential for a turn lower. Check out the live trader sentiment reading and learn how to trade with sentiment with our IG client sentiment guide.
--Written by Jeremy Wagner, CEWA-M
Discuss this market with Jeremy in Monday’s US Opening Bell webinar.
Follow on twitter @JWagnerFXTrader .
Join Jeremy’s distribution list.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.