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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.

EUR/USD Watches French Election from 1.10

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

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