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EUR/USD Technical Analysis: Signs of Topping Emerge

EUR/USD Technical Analysis: Signs of Topping Emerge

Ilya Spivak, Head Strategist, APAC

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Talking Points:

  • EUR/USD Technical Strategy: Flat
  • Euro shows signs of topping after retesting trend line from December 2015
  • Waiting for confirmation of Harami candle pattern before entering short

The Euro may be vulnerable to losses after the appearance of a bearish Harami candlestick pattern having advanced to a two-month high against the US Dollar. The setup follows a retest of trend line support-turned-resistance set from December 2015 and hints a corrective rebound may have run its course.

Near-term support is at 1.1234, the August 2 high, with a break below that on a daily closing basis opening the door for a test of the August 5 low at 1.1046. Alternatively, a push above double top resistance at 1.1415, a barrier reinforced by the aforementioned trend line, targets the May 3 top at 1.1616.

A Harami pattern is indicative of indecision and does not amount to an actionable reversal signalwithout further confirmation. With that in mind, taking up a short position appears premature and opting for the sidelines seems prudent for now until a more concrete opportunity presents itself.

What do retail traders’ EUR/USD bets hint about the price trend? Find out here !

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

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