EUR/USD Technical Strategy: NET SHORT AT 1.2153
- Euro in consolidation mode after rebound form support near 1.13
- Near-term chart setup shows early signs of downtrend resumption
- Confirmation sought to consider adding to EUR/USD short trade
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The Euro has made little progress so far this week, with the EUR/USD exchange rate in much the same position as what was flagged in the forecast published a week ago. A corrective rebound from support near the 1.13 figure has given way to consolidation below resistance capping gains since early June.
A daily close above the outer layer of this barrier – now at 1.1704 – opens the door for a test of the 1.1840-52 area. Alternatively, a push back below support in the 1.1530-54 zone paves the way for a decline back to Augusts swing bottom.
Zooming in to the four-hour chart, the makings of downtrend resumption may be taking shape. The outlines of a Head and Shoulders (H&S) top may be appearing. Completion of the right shoulder followed by a breach of the would-be neckline near 1.15 would make for a potent bearish argument.
With that in mind, confirmation is still absent. That makes it seem premature to continue adding to the EUR/USD short trade initiated at 1.2407, then scaled up near 1.19, and most recently build up further at 1.1660. A wait-and-see approach appears prudent in the interim, especially as US jobs data looms ahead.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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