Euro Technical Analysis - Talking Points
- Euro attempting to climb above trend line from June
- Bullish positioning outlook may accelerate reversal
- EUR/USD gains supported by near-term rising line
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EUR/USD Technical Outlook
The Euro has spent most of its time this month so far regaining lost ground against the US Dollar. Now, EUR/USD may be on the verge of clearing the critical descending resistance channel from June – red parallel lines on the chart below. This is ahead of key US-China trade talks at the end of this week, which could drive major volatility in the US Dollar should negotiations collapse and fuel haven demand for the Greenback.
Curiously, the pair closed right on the upper lip of the channel on October 10, leaving behind a wick that offered a sign of hesitation to commit by traders. Supporting the near-term rise in EUR/USD is a rising trend line from the beginning of this month – blue line below. Should the pair make further upside progress, that may pave the way for a retest of September highs – a key psychological barrier between 1.1076 and 1.1110.
Euro Sentiment Analysis - Bullish
This technical argument is supported by the bullish-contrarian trading bias offered by IG Client Sentiment. According to the latest report on October 10, 48.13 percent of EUR/USD traders are net-long with net-short positioning up 58.37% from the prior week. The combination of current sentiment and recent changes is giving a stronger Euro upside outlook.
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EUR/USD Daily Chart
Zooming in on the 4-hour chart to get a better idea of near-term price action, upside follow-through above falling resistance has been lacking at the time of this report. That leaves the Euro facing former resistance which may act as new support at 1.0999. A fall through the rising trend line from the beginning of October may invalidate a possible reversal of the dominant downtrend. That exposes the 1.0880 – 1.0898 area.
EUR/USD 4-Hour Chart
Euro Charts Created in TradingView
FX Trading Resources
- Having trouble with your strategy? Here’s the #1 mistake that traders make
- See how the Euro is viewed by the trading community at the DailyFX Sentiment Page
- Just getting started? See our beginners’ guide for FX traders
--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
