EUR/USD Technical Analysis: Euro Break Has Downtrend Back in Play
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.
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
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.