EUR/USD Technical Strategy: BEARISH
- Tepid Euro rebound stalls at familiar resistance from January 2018
- Near-term positioning hints bearish reversal may be brewing ahead
- Sellers may seek breakout confirmation before committing in earnest
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The Euro is retesting resistance defining the downtrend against the US Dollar since January 2018 once again. This barrier is now reinforced by rising counter-trend support guiding the upswing from mid-November lows, now acting as resistance after being broken last week.
The appearance of a Shooting Star candlestick at this barrier speaks to indecision and may precede a reversal downward. Sellers may be emboldened if they manage to extend any on-coming decline into a close below the range floor in the 1.1216-34 area, opening the door for longer-lasting bearish follow-through.
Zooming in to the timelier four-hour chart seems to reinforce the sense that a selloff is on the horizon. Prices have produced a Bearish Engulfing candlestick pattern coupled with negative RSI divergence, hinting the week-long EUR/USD recovery may now run its course.
Importantly, the series of higher lows establishing immediate support remains unbroken. Traders looking to take up the short side might wait for confirmation on a breach below this threshold to commit in earnest, especially since selling directly into support might be judged as unattractive on risk/reward grounds.
EUR/USD TRADING RESOURCES
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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