EUR/USD Technical Outlook:
- EUR/USD up against old support, new resistance
- Important spot to watch for downtrend to resume
For an intermediate-term fundamental and technical viewpoint, check out the EUR/USD Forecast.
EUR/USD up against old support, new resistance
The Euro has created a solid area of reference for both sides of the tape since the swing-low that formed in August. Most recently, the area around the mid-11000s acted as support towards the end of last month, which is now pegged as new resistance since the level broke a couple of weeks ago.
Yesterday’s strength saw EUR/USD close at 11071, almost the exact low from October 25. If the trend lower is to hold true to form in how it has played out for months, then yesterday may have marked the end of a bounce before selling resumes.
If this is the case then it shouldn’t be too long before the monthly low at 10989 is broken, and the cycle lows from early October are tested, or worse. Would-be shorts can use current levels as a backstop, or for those with a more conservative approach wait for momentum to turn down before establishing a position.
If price doesn’t turn lower and the Euro has more strength left in it, there is minimal room to rally before a strong confluence of trend resistance will be challenged. The 200-day MA and September 2018 trend-line currently reside near the 11150-mark.
So even if strength does continue, the trend and resistance don’t leave much for longs to hang their hats on. It will take a sharp shift higher and breaking of resistance levels up to 11300+ before the long side can start to gain some true traction. Until then rallies will be viewed as counter-trend in nature only.
Check out the IG Client Sentiment page to see how changes in trader positioning can help signal the next price move in gold and other major markets and currencies.
EUR/USD Daily Chart (old support, new resistance)
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
