EUR/USD TECHNICAL ANALYSIS: BEARISH
- Euro breaks October support line, signaling end of corrective upswing
- Downtrend resumption might set the stage to probe below 1.07 figure
- Risk/reward skew hints a bounce may precede bearish follow-through
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The Euro turned lower against the US Dollar as expected, carving out what looks to be a double top at resistance just below the 1.12 figure. The pair conspicuously broke support guiding the recovery since early October, suggesting the near-term bias has switched to a bearish setting.
Sellers now face support in the 1.1063-71 area. A break below this barrier confirmed on a closing basis sees the next downside threshold in the 1.0989-1.10 zone. Resistance is in the 1.1130-40 region, marked by the underside of the broken trend line and short-term support shelf. The 1.1176-83 area beckons thereafter.
4-hour EURUSD chart created in TradingView
Zooming out to the daily chart to assess broader positioning, it appears as though October’s corrective upswing has given way to resumption of the longer-term downtrend. A leg lower in line with the trend average since mid-2018 would imply a move to test below the 1.07 figure on the horizon.
Daily EURUSD chart created in TradingView
Traders may find entering short unattractive on risk/reward grounds as prices rest squarely at support however. That might diminish scope for near-term follow-through, allowing space for a bounce before any broader selloff gathers steam. Sellers may find a tactically attractive entry point therein.
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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
