EUR/USD Technical Analysis: Euro Chart Setup Favors Bearish Bias

EUR/USD Technical Strategy: NET SHORT AT 1.2276

• Euro continues to digest losses below 1.18 figure vs. US Dollar
• Triangle chart formation hints down trend resumption is ahead
• Breakdown confirmation sought to add to short EUR/USD trade

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The Euro continue to drift sideways below the 1.18 figure against the US Dollar but overall chart positioning suggests a downside bias is favored. Prices have carved out a Triangle chart pattern, a setup typically indicative of trend continuation. In the context of the preceding drop, that carries bearish implications.

From here, a daily close below support in the 1.1527-77 area would double as a break of the Triangle floor, signaling the next leg lower is at hand and exposing the next barrier in the 1.1268-1.1313 region. Alternatively, a turn above Triangle top resistance – now at 1.1766 – targets recent swing highs in the 1.1840-52 zone.

The EUR/USD short position triggered at 1.2407 and subsequently scaled up near 1.19 remains active. Confirmation of bearish resumption on a break of the Triangle will be sought to add to exposure further. In the meantime, opting for a wait-and-see approach seems most prudent.

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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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