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Talking Points:
- EUR/USD Technical Strategy: Flat
- Euro chart setup hints at ebbing momentum after prices hit a 3-year high
- Confirmation of reversal needed before actionable short trade setup forms
The Euro soared to the highest level in over three years against the US Dollar but negative RSI divergence warns of ebbing upside momentum once again. This may precede the formation of a top and a reversal downward, though it might likewise point to mere consolidation before the rally resumes.
From here, a reversal below the 23.6% Fibonacci retracement at 1.2306 opens the door for a test of the 38.2% level at 1.2162. Alternatively, a break above the 38.2% Fib expansion at 1.2458 confirmed on a daily closing basis sees the next upside threshold at 1.2549, the 50% barrier.
A look at longer-term positioning seems to reinforce the possibility that a top might form near current levels. Confirmation is conspicuously absent however, with both the near- and medium-term trends defined by series of higher highs and lows that are yet to be negated. On balance, standing aside appears prudent for now.
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