EUR/USD Technical Analysis: Euro Rallies Most in 2 Months
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- EUR/USD Technical Strategy: Flat
- Euro breaks two-month resistance level, establishes foothold above 1.11
- Looking to re-enter short in line with long-term trend once upswing fizzles
The Euro launched sharply higher against the US Dollar, putting in the largest daily advance in two months and securing a foothold above the 1.11 figure. The downward-sloping channel that capped upside momentum since early December now looks like a bullish continuation Flag pattern.
A daily close above the 50% Fibonacci retracement at 1.1115 clears the way for a challenge of the 61.8% level at 1.1257. Alternatively, a reversal below the 1.0927-74 area marked by the 38.2% Fib and Flag top resistance-turned-support opens the door for a test of the January 21 low at 1.0778.
We entered short EUR/USD at 1.0926. The trade has been stopped out on a daily close above 1.0974. From here, we will wait for the upswing to run its course and look for signs of bearish reversal to re-enter short in line with the long-term trend and our 2016 fundamental outlook.
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