EUR/USD Technical Strategy: NET SHORT AT 1.2153
- RSI divergence hints at on-coming Euro downtrend resumption
- Confirmation on a break of near-term chart supportstill needed
- Waiting to add to short EUR/USD trade, pending greater clarity
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The Euro may finally be ready to resume the down trend against the US Dollar after nearly a month of indecision at resistance in play since mid-June. The appearance of RSI divergence hints at ebbing upside momentum, suggesting a downturn may be in the cards ahead.
A look at the four-hour chart argues for patience however. The bounds of the latest upswing remain conspicuously intact. So too does support above the 1.15 figure that cut short the prior attempt at downtrend resumption in late August. All this warns against assumptions of immediate downside follow-through.
With that in mind, it seems prudent to wait before adding further to the EUR/USD short trade initiated at 1.2407 and subsequently scaled up, first near 1.19 and then again at 1.1660. Exiting the position will be strongly considered in the event of a daily close above trend resistance, now at 1.1719.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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