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EUR/USD Technical Analysis: Will Euro Bounce See Follow-Through?

EUR/USD Technical Analysis: Will Euro Bounce See Follow-Through?

Ilya Spivak,

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Talking Points:

  • EUR/USD Technical Strategy: Short at 1.1207
  • Euro rebounds as expected after forming Morning Star candle pattern
  • Upswing looks corrective for now, opting to keep short position active

The Euro moved higher against the US Dollar as expected following the appearance of a bullish Morning Star candlestick pattern. The move fell short of breaking back above previously breached trend line support set from late-July swing lows, hinting that the move is corrective (at least for now).

From here, a daily close above resistance in the 1.1263-86 area (14.6% Fibonacci expansion, trend line) opens the door for another test of the 1.1366-1.1415 zone (August 8, June 9 highs). Alternatively, a reversal back below the 23.6% level at 1.1200 targets the 1.1097-1.1123 region (August 31 low, 38.2% Fib).

The short EUR/USD trade triggered at 1.1207 narrowly avoided stop-out as prices tested 1.1263 but failed to close above the threshold. The apparently corrective nature of the rally suggests the broader bias still favors the downside. With that in mind, the position will remain in play for now.

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