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EUR/USD Technical Analysis: Large Double Top Taking Shape?

EUR/USD Technical Analysis: Large Double Top Taking Shape?

Ilya Spivak, Head Strategist, APAC

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Talking Points:

  • EUR/USD Technical Strategy: Flat
  • Euro chart setup reveals double top potential at 2017 high vs US Dollar
  • Reversal confirmation, improved risk/reward needed for short position

Euro chart positioning has revealed clues of a possible turn downward on the horizon after prices tested four-month highs against the US Dollar. The pair has produced a bearish Dark Cloud Cover candlestick pattern, with negative RSI divergence bolstering the case for a downside scenario.

Near-term support is in the 1.1961-67 area (November 27 high, 23.6% Fibonacci expansion, with a break below that confirmed on a daily closing basis opening the door for a test of 1.1839 (chart inflection point, trend line). Alternatively, a push above 1.2092 (September 8 high) exposes 1.2223 (38.2% Fib).

Entering short seems premature for now. Near- and medium-term trends are defined by series of higher highs and lows and speak to an upside bias yet to be negated. Furthermore, prices are too close to support to make for acceptable risk/reward parameters. Standing aside seems prudent until a better setup emerges.

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

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