EUR/USD Technical Analysis: Euro Drops to Three-Month Low
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- EUR/USD Technical Strategy: Flat
- Euro Resumes Down Move, Issues Lowest Close in Three Months vs. US Dollar
- Opting to Wait for Improved Risk/Reward Parameters to Re-Enter Short Position
The Euro is back on the defensive against the US Dollar, with prices dropping for a third consecutive day to issue the weakest close in three months. Renewed selling pressure points to continuation of the down move initiated following the formation of a bearish Dark Cloud Cover candlestick pattern, as expected.
Near-term support is in the 1.0818-44 area, marked by a horizontal level established in late May and the 38.2% Fibonacci expansion. A break below that on a daily closing basis sees the next downside barrier at 1.0774, the 50% level. Alternatively, a turn back above the 23.6% Fib at 1.0932 – now acting as resistance – opens the door for a test of the 14.6% expansion at 1.0985.
We are keen to re-enter short after the second half of our short position from 1.1057 was stopped out at breakeven. Risk/reward considerations argue against taking a trade at current levels however as prices sit within a hair of immediate support. We will stand aside for now, waiting for a more compelling setup.
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