EUR/USD Technical Analysis: Euro Rally Rejected at Chart Barrier
EUR/USD TECHNICAL ANALYSIS: BEARISH
- Euro chart setup hints near-term upside momentum may be ebbing
- Breaking support near 1.10 might expose October’s swing bottom
- Longer-term positioning argues for still deeper losses in the cards
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The Euro seemed to hit a wall on another attempt to breach resistance in the 1.1069-80 area. Prices tagged a one-month high above the 1.11 figure intraday but scurried all the way back by session close, producing a dramatic-looking Shooting Star candlestick.
This along with early signs of negative RSI divergence may be indicative of ebbing bullish momentum, which might in turn set the stage for a reversal lower. Initial support is in the 1.0968-90 zone, with a daily close below that opening the door to retest October’s swing low at 1.0879.
Alternatively, securing a foothold above resistance – again, on a daily closing basis – puts the next upside barrier in the 1.1176-83 region into the spotlight. Overtaking that would neutralize immediate selling pressure established with a break of rising counter-trend support at the start of November.
Longer term positioning seems to argue in favor of a downside scenario. EUR/USD appears to be firmly confined within the bounds of a well-defined descent in play since mid-2018. In fact, price action over recent weeks may well mark the start of the next leg lower following another test of resistance.
If bearish follow-through materializes, prior trend dynamics imply an average drawdown of about 4.5 percent is ahead, putting the Euro just below the 1.07 figure. Technical confirmation must still present itself to make such projections actionable however.
Weekly EUR/USD chart created with 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.