EUR/USD Technical Strategy: NET SHORT AT 1.2276
- Euro marks tentative break of 2-month Triangle floor support
- Clearing key hurdle near 1.15 needed for bearish confirmation
- Proximity of US payrolls data bolsters the case for patience
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The Euro is showing tentative signs of resuming the downtrend against the US Dollar but sellers face a potent hurdle near the 1.15 figure. Prices have been consolidating within a Triangle chart pattern established since late May. The setup typically precedes trend continuation, which carries bearish implications in this case.
Turning to the 4-hour chart, it seems a tentative break of the Triangle floor has already occurred. That hints down trend resumption is already at hand. Caution seems warranted however as critical support near the 1.15 figure comes into view.
It looks apparent enough from the 4-hour and daily charts that this has been a notable sticking point recently. Zooming out to the monthly time frame reveals the presence of a former range top established in mid-2015, making the barrier appear even more potent.
With that in mind, it seems premature to add further to the EUR/USD short trade activated at 1.2407 and then scaled up near 1.19. The proximity of big-ticket event risk by way of US jobs data bolsters the case for patience until a better-defined selling opportunity presents itself.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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