EUR/USD Technical Analysis: Euro Flirting with Support Break
EUR/USD TECHNICAL ANALYSIS: BEARISH
- Euro rejected on a test of two-month range resistance vs US Dollar
- Shooting Star candlestick hints at topping as bullish conviction ebbs
- Confirmation of reversal needed to make bearish setup actionable
The Euro recoiled from resistance at the top of its recent range against the US Dollar, proving prescient the warning offered by negative RSI divergence about durability of a surge to four-month highs last week. The appearance of a dramatic-looking Shooting Star candlestick at resistance now bolsters the case for draining bullish conviction. That may precede a downturn.
Zooming into the four-hour chart for a sense of near-term positioning, EUR/USD seems to be sitting squarely at support in the 1.1110-16 area, marked by a former resistance barrier as well as the trend line guiding prices’ latest upswing. Breaking below that looks to expose the 1.1051-65 congestion region, followed by the range bottom in the 1.0968-90 zone.
4-hour EUR/USD chart created with TradingView
On balance, this means that – capitulation at the range top notwithstanding – the bounds of the upswing from late-November lows remain intact for now. Furthermore, proximity to immediate support seems to make initiating short exposure unattractive form a risk/reward perspective. Would-be sellers may opt to wait for a confirmed break of upward-sloping support before considering the setup actionable.
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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.