EUR/USD Technical Analysis: Euro Double Top in the Works?
EUR/USD TECHNICAL ANALYSIS: BEARISH
- Euro recovery puts prices back at October swing high
- Cautious signs of ebbing momentum hint at double top
- Actionable short trade setup confirmation still pending
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The Euro has recovered to trade near its monthly peaks against the US Dollar once again having found support in the 1.1069-76 inflection region. The appearance of a Doji candlestick ahead of resistance in the 1.1183-89 area – marked by the October 18 high and the 38.2% Fibonacci expansion – speaks to indecision, suggesting the pair may not muster the wherewithal for a breakout.
A turn lower that puts prices back below 1.1069 on a daily closing basis would violate the bounds of the near-term uptrend and set the stage for resumption of the long-term downtrend. The 1.10 figure lines up as next downside inflection point thereafter.Alternatively, a break higher exposes the next topside barrier at 1.1225, the 50% Fib level.
Zooming in to the four-hour chart reveals early signs of negative RSI divergence. While this might mean little beyond near-term consolidation before another foray upward, it might likewise mark the beginning of a more substantive loss of bullish momentum. In turn, this might develop into a reversal. Pushing below resistance-turned-support in the 1.1063-71 zone seems like a prerequisite for follow-through.
4-hour EURUSD chart created in TradingView
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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.