EUR/USD Technical Strategy: NET SHORT AT 1.2276
- Euro rises to challenge 3-month trend resistance vs US Dollar
- Signs of diminishing upside momentum show up on 4-hr chart
- Looking for confirmation to increase short EUR/USD exposure
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The Euro has managed spirited recovery against the US Dollar after finding support at the 1.13 figure but the move higher may be running out of steam. Prices extended upward after completing a Head and Shoulders chart pattern, as expected.
The pair now faces trend resistance capping gains since early June.A daily close above its outer layer – now at 1.1686 – opens the door for a test of the 1.1840-52 area. Alternatively, a turn back below support in the 1.1530-54 zone paves the way for another foray to challenge the 1.13 threshold.
Turning to the four-hour chart, the appearance of negative RSI divergence hints at ebbing upside momentum and suggests that a turn lower might be imminent. Confirmation is needed however considering the series of higher highs and lows defining the short-term trend bias remains intact.
The EUR/USD short position activated at 1.2407 and then scaled up near 1.19 is still in play, looking for dominant downtrend resumption. A break of countertrend support will be sought to size up opportunities for increasingly exposure further. A stop-loss will be activated on a discretionary basis.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
To contact Ilya, use the comments section below or @IlyaSpivak on Twitter
