Talking Points:
- EUR/USD found support around the 1.0950 level
- Pair might need to see a clear break above resistance at 1.1200 for further upside conviction
- 1.1100 could be in focus on a move lower
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The EUR/USD is trading higher after Friday’s US GDP report, and the pair appears to be trading at a key resistance area.
The pair has seen a bounce higher last week following a decline to the 1.0950 level, and is currently trading below a potential resistance zone around the 1.12 handle between 1.1220 and 1.1186.
A clean break above that area might put focus on the 1.13 figure for possible resistance, before things get interesting around the range swing highs; initially at 1.1400-1.1430, followed by the 1.15 handle, 1.16175 and the August 2015 high at the 1.1714 level.
A hold below 1.1186 might put focus initially on the 1.11 handle for possible support, followed by the 1.10 figure and what seems like a key support zone below the 1.0950 level.
Meanwhile, the DailyFX Speculative Sentiment Index (SSI) is showing that about 35.6% of traders are long the EUR/USD at the time of writing, marking the largest short side positioning since May highs. The SSI is mainly used as a contrarian indicator, but range bound trading conditions are correlated with retail traders more successful periods suggesting potential weakness ahead (See “Traits of successful traders”).
You can find more info about the DailyFX SSI indicator here.
EUR/USD Daily Chart: August 1, 2016
--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
To contact Oded Shimoni, e-mail oshimoni@dailyfx.com
Follow him on Twitter at @OdedShimoni
