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EUR/USD Technical Strategy: FLAT
- Euro launches sharp recovery after finding support near 1.22 vs. US Dollar
- Near-term down trend established from January high remains intact for now
- Bearish reversal signal or clear-cut breakout needed for an actionable trade
The Euro has launched a spirited recovery after finding support near the 1.22 figure against the US Dollar but the resumption of its uptrend is yet to be confirmed. Indeed, near-term price action continues to be defined by a series of lower highs and lows, warning against assuming that upside continuation is necessarily ahead.
A daily close above falling trend line resistance at 1.2492 opens the door for a challenge of the 1.2538-80 area (January 25 high, 38.2% Fibonacci expansion). Alternatively, a move back below the chart inflection point at 1.2364 paves the way for a retest of the February 9 low at 1.2204.
The short EUR/USD trade activated at 1.2274 has been stopped out. From here, the absence of a bearish reversal signal argues against re-entering the position while proximity to resistance warns not to enter long on risk/reward grounds. On balance, standing aside seems most sensible for the time being.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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