EUR/USD TECHNICAL ANALYSIS: BEARISH
- Euro back on the defensive after sellers neutralize upside breakout
- Immediate support below 1.10, key resistance just under 1.12 mark
- Near-term chart setup warns against over-extrapolating downside
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The Euro snapped lower, undoing what looked like a bullish breakout. Signs of ebbing bullish momentum noted last week proved prescient, suggesting that long-term bearish trend resumption signaled by November’s breakdown remains in play.
The single currency has slipped back below the 1.1069-80 price inflection zone, seemingly opening the door for another test of the 1.0968-90 area. Breaking below that on a daily closing basis would expose the October 1 low at 1.0879 next.
Near-term resistance is marked by a downward-sloping barrier connecting swing highs over the past two months.Pushing above its outer layer – now at 1.1124 – would put double top resistance in the 1.1176-83 region back in.
Daily EUR/USD chart created with TradingView
Zooming in to the four-hour chart to size up nearer-term positioning warns against over-extrapolating downside follow-through for now. EUR/USD conspicuously fell short of breaching the 1.1054-65 congestion area on the way lower, warning that a rebound may precede any further weakness.
4-hour EUR/USD chart created with TradingView
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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