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EUR/USD Technical Analysis: Short Trade Setup Sought

EUR/USD Technical Analysis: Short Trade Setup Sought

Ilya Spivak, Head Strategist, APAC

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Talking Points:

  • EUR/USD Technical Strategy: Flat
  • Euro Poised to Complete First Three-Day Losing Streak in a Month
  • Risk/Reward Parameters Continue to Undermine Short Trade Potential

The Euro continues to push lower against the US Dollar having marked a top as expected following the appearance of a bearish Dark Cloud Cover candlestick pattern. Prices are poised to secure the third consecutive daily decline, marking the first such losing streak in a month.

Confirmation of a break below the 50% Fibonacci expansion at 1.1146 on a daily closing basis exposes the next downside threshold at 1.1072, the 61.8% level. A subsequent push downward beyond that would target a key barrier 1.0980, marked by the 76.4% Fib and a rising trend line in play since March. Alternatively, a turn back above 1.1146 sees the next layer of resistance at 1.1220, the 38.2% expansion.

While we are keen to get short EURUSD in line with the long-term down trend, the available trading range at 74 pips remains too narrow to justify a trade on a risk/reward basis given a 20-day ATR reading of 125 pips. With that in mind, we will remain flat for now.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.