EUR/USD Technical Strategy: Flat
- Euro break of counter-trend support hints at bearish resumption
- Positioning on the daily EUR/USD chart still appears congested
- Confirmation sought before re-establishing short side exposure
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The Euro may be attempting to resume its downward trend against the US Dollar yet again. The four-hour chart shows prices breaking counter-trend support guiding them higher over the past week after yet another rejection at resistance capping gains since mid-October. What’s more, the broken support line held up on a retest, seemingly bolstering the case for bearish continuation to follow.
A look at the daily chart warns against premature conviction however. Prices remain wedged between resistance set from September’s swing high and congestion area support in the 1.1267-1.1301 zone. Besides the congested setup’s insinuation at the absence of directional conviction, the narrowing range framed by immediate chart barriers makes for unattractive risk/reward parameters.
On balance – while the long-term EUR/USD trend continues to look decidedly bearish – an actionable short trade setup appears to be missing now. A daily close below 1.1267 might well serve as a trigger to take on exposure, although this too will need to be evaluated on risk/reward grounds when and if it happens. In the meantime, standing aside seems prudent.
EUR/USD TRADING RESOURCES
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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