EUR/USD Technical Strategy: Flat
- Euro breaks 2-week support, hinting at downtrend resumption
- Proximity to key barrier near 1.13 warns against short position
- Better risk/reward on break or bounce sought for trade setup
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The Euro may be resuming the near-term down trend against the US Dollar. A lower low in the progression started from the peak in late September seems to have been established and confirmed following a break below counter-trend line support set from the November 12 swing bottom.
While the reversal is encouragingly in line with the long-term price trend, the daily chart warns that it may be premature to interpret it as an actionable trigger to enter short. Prices sit in closer proximity to support at 1.1301 than immediate resistance – where the outer layer looks to be at 1.1481 – making it unattractive to sell from a risk/reward perspective.
With this in mind, opting for the sidelines seems most prudent until a better-looking trade setup presents itself. That may come on a break through 1.1301 or a rebound that brings prices closer to resistance without invalidating the overall bearish bias. If and how the latter scenario is realized in practice need to be observed over time, with trading decisions to follow therefrom.
EUR/USD TRADING RESOURCES
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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