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EURUSD Chart Analysis: Euro at Trend-Defining Support - Now What?

EURUSD Chart Analysis: Euro at Trend-Defining Support - Now What?

2019-05-31 03:49:00
Ilya Spivak, Sr. Currency Strategist
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EURUSD Technical Strategy: BEARISH

  • Euro back at familiar support after upswing falters at former support
  • Sellers on notice as Rising Wedge, RSI divergence warns of upswing
  • Daily close above 1.13 needed to invalidate near-term bearish bias

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The Euro is struggling to find lasting direction cues against the US Dollar. A brief upswing faltered on a retest of countertrend line support-turned-resistance, with prices slumping back to the 1.1106-33 support zone. Still, the establishment of a lower swing high below resistance set from September 2018 implies a broadly bearish bias has been maintained (at least for now).

EURUSD chart - 4 hour

That is probably cold comfort for EURUSD sellers however. Prices are sitting squarely at support, making a short trade appear unattractive from a risk/reward perspective. Furthermore, the makings of Rising Wedge formation coupled with positive RSI divergence on the daily chart warns of ebbing downside momentum and hints that a reversal upward might be brewing ahead.

EURUSD chart - daily

Confirming the Wedge setup would require a daily close above its upper boundary, now essentially at the 1.13 figure. Doing so successfully seems likely to open the door for a foray above 1.14. Wedge floor support is at 1.1093. Breaking below that may reanimate bearish enthusiasm, exposing a minor downside barrier at 1.1024 on the way lower to a more potent threshold in the 1.0778-1.0874 congestion area.

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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivakon Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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