EUR/USD Technical Analysis: Candle Setup Hints at Euro Weakness
EUR/USD TECHNICAL STRATEGY: BEARISH
- Bearish Dark Cloud Cover candle pattern hints at Euro losses ahead
- Confirmation sought on a break of neckline support on 4-hour chart
- Invalidating bearish bias would begin with a close above 1.15 figure
The Euro put in a bearish Dark Cloud Cover candlestick pattern on a test of resistance guiding the currency lower against the US Dollar for over a year. The setup hints corrective gains have run their course and dominant downtrend resumption is brewing ahead.
The first layer of noteworthy support lines up at 1.1290, the January 24 low. A daily close below that exposes the November 9 bottom at 1.1216. Alternatively, a daily close above trend resistance – now at 1.1501 – targets the 1.1543-54 congestion area, followed by the October 16 high at 1.1622.
Turning to the four-chart for more actionable direction cues, neckline support guiding the past week of price action comes in focus. A break below that as well as the 1.1418-26 congestion region may be the confirmation that sellers are looking for to signal the likelihood of downside follow-through.
Sizing up possible catalysts for the downturn, a relatively quiet offering of Euro-specific event risk is likely to put the onus on the USD side of the equation. On that front, deepening risk aversion may help validate technical cues as the Greenback finds support in haven-seeking capital flows.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.