EUR/USD Technical Analysis: Short Trade Setup Established
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- EUR/USD Technical Strategy: Pending Short at 1.1224
- Euro Breaks Monthly Rising Trend Line Support Against US Dollar
- Looking for Rebound Above 1.12 Figure to Trigger Short Position
The Euro turned sharply lower, breaking support guiding the upward correction against the US Dollar set from early August and hinting at deeper losses. The single currency tumbled after the ECB hinted it may expand its stimulus efforts at yesterday monetary policy meeting.
Near-term support is now at 1.1118, the 38.2% Fibonacci expansion, with a break below that on a daily closing basis exposing the 50% level at 1.1052. Alternatively, a rebound above rising trend line support-turned-resistance at 1.1225 opens the door for a challenge of the September 1 high at 1.1331.
Prices are too close to support to justify entering short from a risk/reward perspective. With that in mind, we will set up an entry order to sell the pair at 1.1224. If triggered, the trade will initially aim for a return to test 1.1118 and carry a stop-loss activated on a daily close above 1.1331. We suspect a correction higher may be triggered by the upcoming release of US employment data.
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