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EUR/USD Technical Analysis: Three-Month Uptrend Broken

EUR/USD Technical Analysis: Three-Month Uptrend Broken

Ilya Spivak, Head Strategist, APAC

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Talking Points:

  • EUR/USD Technical Strategy: Pending short at 1.1921
  • Euro breaks three-month uptrend, hinting a major reversal is in the works
  • Corrective bounce sought to offer improved risk/reward for short position

The Euro turned lower after finding resistance below the 1.21 figure against the US Dollar as expected, breaking trend line support guiding it higher since mid-June. Building negative RSI divergence ahead of the downturn bolsters the case for follow-through, suggesting a significant reversal may be in progress.

From here, a daily close below the 1.1824-63 area (former resistance, 23.6% Fibonacci expansion) opens the door for a challenge of the 38.2% level at 1.1721. Alternatively, a turn back above 1.1950 (trend line, 14.6% Fib) paves the way for another challenge of double top resistance at 1.2070.

Prices are sitting squarely at support, hinting that entering short at current levels is unattractive from a risk/reward perspective. With that in mind, an entry order to sell the pair has been established at 1.1921. If activated, the trade will initially target 1.1863 and carry a stop-loss activated on a daily close above 1.1977.

What do retail traders’ buy/sell decisions hint about on-coming EUR/USD price moves? Find out here !

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

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