EUR/USD Technical Analysis: Setting the Stage for a Drop to 1.05?
EUR/USD TECHNICAL ANALYSIS: BEARISH
- Euro recoils from 3-month trend resistance, eyeing September low
- Monthly close below 1.0980 may mean a drop to 1.05 may is next
- Invalidating near-term bearish bias needs a close above 1.1116
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The Euro recoiled from resistance guiding losses against the US Dollar since late June, slipping past the lower bound of a choppy congestion range. Sellers now aim to challenge the .0924-26 area,marked by September’s monthly low and the 38.2% Fibonacci expansion.
A daily close below this barrier targets the 61.8% level at 1.0809 next. Invalidating the near-term bearish bias is a tall order. Would-be buyers face back-to-back resistance levels running up from the 23.6% Fib at 1.0995 and through 1.1116, the outer layer of an infection zone in play since late April.
The monthly chart underscores the Euro’s precarious position. With a mere three days of trade left in September, prices are dangerously close to securing a close below the four-year inflection point at 1.0980. That may well set the stage for a subsequent decline to test support clustered around the 1.05 figure.
Monthly EURUSD chart created in TradingView
Having said that, sellers are probably mindful of the adverse risk/reward implications of piling into shorts at a time when the currency pair sits within a hair of immediate support. Securing a daily close below 1.0924 is probably a prerequisite for lasting follow-through in the near term.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.