EUR/USD Technical Analysis: Euro Sinks to Key Support - Now What?
EUR/USD Technical Strategy: NET SHORT AT 1.2276
- Euro drops to six-month low, challenging a key chart barrier
- Breach of outer support layer clears a path to test below 1.14
- Opportunities sought to scale up short EUR/USD trade further
The Euro is poised to challenge critical chart support having dropped to the lowest level in six months against the US Dollar. The decade-long down trend has resumed with gusto as expected, with May on pace to deliver the steepest monthly decline since November 2015.
Sellers are now poised to challenge the 1.1442-1.16 area, a former resistance threshold marking the top of the range containing prices from early March 2015 through mid-July 2017 that has now been recast as support. Breaching this barrier would open the door for the next leg of the long-term down move.
Turning to the daily chart, a push below 1.1442 sees the next support layer in the 1.1279-1.1347 region. Alternatively, a close back above support-turned-resistance in the 1.1713-32 zone – a barrier reinforced by a falling trend line set from mid-April – exposes the inflection point at 1.1827 once again.
The cost basis on running short EUR/USD exposure is at 1.2276 after adding to the trade above the 1.19 figure having initiated the position at 1.2407. Opportunities to scale up further will be sought to the extent that they are acceptable from a risk/reward perspective. A stop-loss will be triggered on a discretionary basis.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.