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EUR/USD Technical Analysis: Ready to Make Good on Topping Setup?

EUR/USD Technical Analysis: Ready to Make Good on Topping Setup?

Ilya Spivak, Head Strategist, APAC

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Talking Points:

  • EUR/USD Technical Strategy: Short at 1.1640
  • Euro drops to three-month low as prices try to make good on topping pattern
  • Short trade target initially above 1.14, measured H&S objective below 1.13

The Euro is attempting to make good on a bearish Head and Shoulders topping pattern, with the single currency testing three-month lows against the US Dollar. The overall formation implies a measured downside objective below the 1.13 figure.

From here, a daily close below the 38.2% Fibonacci retracementat 1.1423 paves the way for a challenge of the 50% level at 1.1216. Alternatively, a reversal back above the 23.6% Fib at 1.1679 opens the door for a retest of support-turned-resistance at 1.1749.

The EUR/USD short position activated at 1.1640 is still in play, looking for an initial move at 1.1423. A stop-loss will be triggered on a daily close above 1.1749. Profit on half of the trade will be booked and the stop-loss adjusted 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!

EUR/USD Technical Analysis: Ready to Make Good on Topping Setup?

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

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