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EUR/USD Technical Analysis: Downturn Brewing Ahead?

EUR/USD Technical Analysis: Downturn Brewing Ahead?

Ilya Spivak, Head Strategist, APAC

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Talking Points:

  • EUR/USD Technical Strategy: Flat
  • Euro may be building out a bearish Rising Wedge chart formation
  • Negative RSI divergence bolters the case for an on-coming downturn

The Euro has advanced to the highest level in two months against the US Dollar but signs of a possible reversal lower may be starting to emerge. Price action appears to be taking the shape of a typically bearish Rising Wedge formation. Negative RSI divergence bolsters the case for a downside scenario.

A daily close below the would-be wedge floor – now at 1.0673 – would initially see the next major support level at 1.0518. Alternatively, a push above resistance in the 1.0827-51 area (38.2% Fibonacci retracement, October 25 low) would open the door for a test of the 50% level at 1.0978.

Current positioning does not offer an actionable short trade setup at this time. A clear-cut bearish reversal signal is conspicuously absent and the Wedge pattern can only be confirmed after its floor has convincingly given way. With that in mind, opting to observe from the sidelines seem prudent.

Will the Euro continue to rise through the first quarter of 2017? See our forecast and find out!

EUR/USD Technical Analysis: Downturn Brewing Ahead?

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

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