EURUSD Technical Strategy: BEARISH
- Euro struggling to extend down move below 1.11 mark vs US Dollar
- Rising wedge pattern, RSI divergence hint a bottom may be forming
- Daily close above 1.13 needed to neutralize near-term bearish bias
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The Euro was unable to find lasting downside momentum on a break of counter-trend line support set from late April lows. Prices spiked lower to test support just above the 1.11 figure against the US Dollar but fell short of securing a breakout, bouncing to retest the 1.1175-86 chart inflection region instead.
The bounce still looks broadly corrective and, in any case, the bounds of the dominant near-term downtrend set from September 2018 remain firmly intact. Invalidating that would now require a rally back above the 1.13 figure. Still, sellers’ inability to follow through is noteworthy as broader positioning seems conflicted.
Turning to the daily chart, the outlines of a bullish Falling Wedge formation coupled with positive RSI divergence warn that a rebound may be in the cards. As much is unconfirmed for now and the setup may yet unravel in the bears’ favor. Ongoing EU Parliament elections may be a catalyst one way or the other.
A daily close above the wedge top – now at 1.1311 – sets the stage for a test above the 1.14 handle. Immediate support is at 1.1097, marked by a chart inflection point dating back to May 2017 and the wedge bottom. Pushing below that is likely to see the next downside hurdle at 1.1024, another former sticking point.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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