EUR/USD Technical Strategy: NET SHORT AT 1.2276
- Euro down trend may be ready to resume after brief upswing
- Shooting Star candle confirmed with counter-trend line break
- Adding to prior EUR/USD short, looking for follow-through
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The Euro may be ready to resume the down move started in mid-April against the US Dollar after brief corrective bounce from support above the 1.18 figure. Renewed selling would mark progress in what looks to be the next leg of the decade-long Euro down trend, a move revived with last month’s close.
The daily chart shows a telltale Shooting Star candlestick on a retest of support-turned-resistance in the 1.1930-56 area. That is indicative of indecision after an upswing and may mark the first sign of topping, although an actionable reversal signal is not immediately implied by this setup alone.
That comes from the four-hour chart, where the break of counter-trend support line guiding the move higher from the May 9 low appears to suggest bearish resumption is at hand. Immediate resistance is at 1.1996, the latest swing high. The first layer of noteworthy support lines up in the 1.1821-37 region.
At this point, risk/reward parameters appear acceptable to scale back into the short EUR/USD trade triggered at 1.2407 after partial profit was booked at the initial objective. The net entry price for overall exposure is now at 1.2276. A stop-loss will be activated on a discretionary basis.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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