EUR/USD TECHNICAL ANALYSIS: BEARISH
- Euro on the upswing vs US Dollar, eyeing resistance above 1.12
- Overall trend still bearish but prices threatening 17-month hurdle
- Confirmation, improved risk/reward needed for actionable setup
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The Euro extended higher after clearing resistance guiding it lower against the US Dollar since late June, as expected. The single currency now looks poised to challenge the 61.8% Fibonacci retracement at 1.1209, with a break above that on a daily closing basis exposing the 78.6% level at 1.1298.
Initial support is at 1.1146, the 50% Fib. Reversing back below that puts the 1.1069-83 area, marked by a chart inflection zone and the 38.2% retracement, into focus. Critically, breaking below that would also pierce upward-sloping support defining the upswing, suggesting resumption of the longer-term decline.
Daily EURUSD chart created in TradingView
Indeed, zooming out to the weekly chart, the recent upswing looks clearly contained within the bounds of a downtrend in play since mid-2018. In fact, EUR/USD now finds itself testing the move’s upper limits. Needless to say, this is a natural place to look for signs of topping, such as they might be.
Weekly EURUSD chart created in TradingView
Having said that, an actionable bearish reversal signal is conspicuously absent for now and the possibility of a trend-altering upside breakout cannot be ruled out. Nevertheless, chasing recent gains on the long side might be an unattractive proposition from a risk/reward perspective, at least for now.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
To contact Ilya, use the comments section below or @IlyaSpivak on Twitter
