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EURUSD Technical Analysis: Downside Favored as Prices Consolidate

EURUSD Technical Analysis: Downside Favored as Prices Consolidate

Ilya Spivak, Head Strategist, APAC

EURUSD TECHNICAL ANALYSIS: NEUTRAL

  • Near-term Euro technical positioning vs US Dollar still looks conflicted
  • Bullish, bearish setups escape invalidation, but follow-through is absent
  • Monthly chart analysis hints the path of least resistance still points lower

See the latest Euro technical and fundamental forecast to find out what will drive prices in Q3!

Euro technical positioning against the US Dollar continues to send conflicting cues. Lasting upside follow-through has failed to materialize following the completion a bullish Falling Wedge chart formation, at least so far. A subsequent break of rising trend support guiding the upswing from late May lows – a would-be sign of bearish reversal – has likewise struggled to translate into substantive development.

Resistance-turned-support at the wedge top is holding up for now, beckoning further confirmation before the setup can be well and truly invalidated. Broken trend line support has likewise held up as resistance on multiple retests however, warning that the bearish implications of its breach can still make claim to technical validity as well. An actionable trade setup seems difficult to divine under such conditions.

EURUSD Technical Analysis: Downside Favored as Prices Consolidate

This seems like an opportune time to zoom out to the monthly chart for a bit of perspective. The setup seems quite a bit clearer here: EURUSD has been locked in a well-defined downtrend for over a decade, with a rejection from resistance in early 2018 leading to the break of range resistance-turned-support near the 1.15 mark. That seems to put the next major inflection point around the 1.05 figure.

Euro vs US Dollar price chart - monthly

On balance, this establishes the path of least resistance as probably favoring the downside. This might suggest traders looking for an end to near-term congestion to approach any buying opportunities with a greater degree of caution than the alternative. This could be reflected in mitigating risk management measures, including smaller than normal position size and/or a more conservative approach to setting stop-loss parameters.

EURUSD TRADING RESOURCES

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

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

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

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