EUR/USD Technical Analysis: 4-Week Euro Uptrend Broken. Now What?
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EUR/USD TECHNICAL ANALYSIS: BEARISH
- Euro recoils from resistance, breaks counter-trend support
- Improved risk/reward needed for actionable short position
- Invaliding bearish bias likely requires close above 1.1183
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The Euro recoiled from resistance at the top of a downward-sloping trend channel guiding it lower against the US Dollar since mid-2018, as suspected. If follow-through is to materialize, the late-September low at 1.0879 marks the next major inflection point. A close above the channel top is a prerequisite for invalidation.
Weekly EURUSD chart created in TradingView
Zooming in to the daily chart for a more actionable picture, positioning seems more bearish still. Prices have broken support guiding the upswing from the October 1 swing bottom, neutralizing what looks like a corrective upswing and setting the stage for the next leg in a structural decline.
Daily EURUSD chart created in TradingView
An actionable setup may require further progress however. The pair sits squarely atop the 1.1069-76 inflection zone, making a short trade appear unattractive form a risk/reward perspective even as the overall setup warns against taking up the long side.
On balance, investors might opt for the sidelines until a bit more clarity emerges. A breach below 1.1069 exposes the 1.0979-94 area next. Defusing imminent selling pressure probably requires a daily close above the October 18 high at 1.1183.
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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
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.