EUR/USD Technical Strategy: NET SHORT AT 1.2276
- Euro down to 13-month low, pushing through pivotal support
- Breakout to mark resumption of the decade-long down move
- Patience seems prudent before adding more to short position
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The Euro may be on the verge of resuming its down trend against the US Dollar as prices plunge through critical long-term chart support. The currency pair is accelerating below resistance-turned-support that capped a two-year consolidation range set from May 2015.
Turning to the daily chart, it is revealed that completion of Triangle pattern preceded the drop (as expected). From here, a daily close below the 38.2% Fibonacci expansion at 1.1452 opens the door for a challenge of the 50% level at 1.1329. Alternatively, a move back above the outer layer of resistance at 1.1577 exposes the underside of the Triangle setup – now at 1.1629 – for another test.
A EUR/USD short trade was triggered at 1.2407 and subsequently scaled up near 1.19. While it is admittedly tempting to add to the position further here, caution seems called for. The drop is conspicuously stalling at Fib support and the fundamental backdrop driving the selloff remains in flux.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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