EUR/USD Technical Strategy: BEARISH
- Euro recovery rejected at near-term bearish trend resistance
- Preliminary support break hints at retest of support near 1.11
- Rising Wedge pattern warns sellers to proceed with caution
See the quarterly Euro forecast to learn what is likely to drive price action through mid-year!
Downside progress stalled after the Euro fell to a two-year low against the US Dollar, as expected. Prices recovered from support marked by the bottom of a would-be Falling Wedge chart pattern, moving to re-test bounds of the near-term downswing from the March 20 high.
The advance was halted in dramatic fashion at this barrier, with the pair extending out to touch the outer layer of resistance only to capitulate and fully backtrackintraday. Indeed, a look at the four-hour chart suggests counter-trend support has been broken, setting the stage for bearish resumption.
Immediate support appears to be in the 1.1175-82 area, with a break below that opening the door for a test of April’s swing bottom at 1.1109. Defusing immediate downside pressure seems to require a break past resistance established along swing highs from late March. That is now at 1.1254.
Critically, the wedge setup visible on the daily chart typically carries bullish implications. For these to be neutralized, a daily close through its floor seems called for. That seems to imply that a sustained breach of the 1.11 figure is needed to make the case for lasting downward follow-through.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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