EUR/USD Technical Strategy: BEARISH
- Euro back at 14-month down trend resistance vs US Dollar
- Near-term chart positioning hints bearish resumption likely
- Confirmation of turn on immediate support break pending
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The Euro is back to testing resistance guiding it lower against he US Dollar since January 2018, a barrier reinforced by the top of a choppy channel in play over the past two months. Another rejection might open the door for the next leg in the single currency’s slow downward grind while a break higher has might set the stage for a significant medium-term trend reversal.
A look at the four-hour chart seems to imply that more immediate positioning favors downside continuation. The appearance of negative RSI divergence on a test of near-term resistance in the 1.1321-31 area speaks to ebbing upside momentum that might precede a reversal. The series of higher highs and lows set from the March 7 low remains intact however, hinting that confirmation is still needed.
On balance, this seems to argue for a patience. The bearish implications of overall positioning argue against taking up the long side but the absence of an actionable trigger to activate a short trade mean that doing so is probably premature. With that in mind, traders might opt for the sidelines until a more compelling opportunity presents itself. That may come courtesy of a variety of fundamental catalysts on tap ahead.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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