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EUR/USD Technical Analysis: Euro Topping Cues Intact After Bounce

EUR/USD Technical Analysis: Euro Topping Cues Intact After Bounce

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Talking Points:

  • EUR/USD Technical Strategy: Flat
  • Euro upswing keeps bearish breakout implications broadly intact for now
  • New bearish reversal signal needed for an actionable short position setup

The Euro turned higher finding support below the 1.19 figure against the US Dollar but the outlines of last week’s bearish breakout remain intact. Indeed, recent gains have been conspicuously capped by a rising trend line that served as defining support for three months before being recast as resistance.

A break above this upward-slowing barrier – now at 1.2020 – opens the door for retesting a double top in the 1.2068-70 area (23.6% Fibonacci expansion, August 29 high). Alternatively, a move back below the 14.6% level at 1.1980 paves the way for another challenge of the 38.2% Fib retracement at 1.1863.

Last week’s entry order to sell EUR/USD at 1.1921 was activated and the resulting trade was subsequently stopped out. Positioning below the trend line as well as the double top argues for a bearish bias but a new actionable signal is needed to re-enter short. In the meantime, staying flat seems most prudent.

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