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EUR/USD Technical Analysis: Major Trend Reversal Hinted Ahead

EUR/USD Technical Analysis: Major Trend Reversal Hinted Ahead

Ilya Spivak,

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Talking Points:

  • EUR/USD Technical Strategy: Short at 1.1640
  • Euro completes large Head and Shoulders topping chart formation
  • Short position aims for a challenge of Fib support above 1.14 figure

The Euro looks to have completed a large Head and Shoulders topping batter, hinting a move below the 1.14 figure against the US Dollar is now ahead. The pattern’s neckline was breached after the ECB monetary policy announcement struck an unmistakably dovish tone, as expected.

The next layer of major support comes in at 1.1423, the 38.2% Fibonacci retracement. A daily close below this barrier exposes the 50% level at 1.1216. Alternatively, a move back above the 23.6% Fib at 1.1679 opens the door for a retest of support-turned-resistance at 1.1749.

A short EUR/USD position was activated at 1.1640, initially targeting 1.1423. A stop-loss will be activated on a daily close above 1.1749. Profit on half of open exposure will be booked and the stop-loss moved to the breakeven level when (and if) the first objective is met.

What are the fundamental forces driving EUR/USD through year-end? See our forecast here !

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