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Talking Points:
- EUR/USD Technical Strategy: Flat
- Euro Extends Decline But RSI Divergence, Falling Wedge Setup Hint at Reversal Ahead
- Looking to Enter Short in Line with Long-Term Trend Following Corrective Recovery
The Euro edged lower for a fourth consecutive day against the US Dollar, building on last week’s breach of the 1.06 figure to hit a seven-month low. Positive RSI divergence and the formation of a Falling Wedge chart pattern hint that a reversal to the upside may be brewing ahead however.
A daily close below support at 1.0556, the 23.6% Fibonacci expansion, opens the door for a descent to a major inflection point in the 1.0428-61 area marked by the March 13 low and the 38.2% level. Alternatively, a move back above support-turned-resistance at 1.0635, the 14.6% expansion, sees the next upside barrier in the 1.0779-1.0818 zone (23.6% Fib retracement, May 26 low).
We are keen to enter short EUR/USD in line with the long-term down trend. With that in mind, we will treat any on-coming advance as corrective, looking to the move as an opportunity to sell the pair at more attractive levels. In the meantime, we remain flat.
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