EUR/USD Technical Analysis: False Breakout to Mark Euro Top?
EUR/USD TECHNICAL ANALYSIS: BEARISH
- Euro tumbles back below 1.12, invalidating late-2019 upside break
- Shooting Star candlestick at longer-term resistance might mark top
- Confirmation of broader bearish trend resumption is still pending
The Euro has retreated below the 1.12 figure against the US Dollar, seemingly paining the late-2019 breach of range resistance set from mid-October as a false breakout. Support in the 1.1069-1.1104 congestion area is now in focus. Breaking below it on a daily closing basis would double as invalidation of the uptrend carved out since mid-November, suggesting the long-term descent may be back in play.
Indeed, zooming out to the weekly chart reveals a telltale Spinning Top candlestick formed on a test of 1.1183, the intersection of October’s swing top and the outer layer of the resistance guiding EUR/USD lower since mid-2018. This coupled with early signs of negative RSI divergence speaks to ebbing upside momentum that might precede bearish reversal.
Weekly EUR/USD chart created with TradingView
Confirmation is still needed for an actionable trade setup however. A move downward that invalidates the series of higher lows started in late September – now represented by a close below rising trend line support at 1.1060 – is probably necessary to that end. Such a reversal would initially set the stage for a test below the 1.09 figure. Alternatively, a breakout higher targets June’s high at 1.1412 at first.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
To contact Ilya, use the comments section below or @IlyaSpivakon Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.