EUR/USD Technical Analysis: Euro May Bounce From 3-Year Low
EUR/USD TECHNICAL ANALYSIS: BEARISH
- Euro slide continues, EUR/USD probing support below 1.08 figure
- Near-term chart positioning suggests selling pressure may be ebbing
- Retail trader sentiment studies warn that Euro upturn may brewing
The Euro continues to sink against the US Dollar as expected, sliding to the lowest level in close to 3 years to probe below the 1.08 figure. The outer layer of immediate support is at 1.0783, with a daily close below that seemingly opening the door for a test of the December 2016 – April 2017 pivot level.
Zooming into the four-hour chart for a look at near-term positioning warns against over-extrapolating scope for immediate bearish follow-through however. Positive RSI divergence warns that downside momentum may be ebbing, which might precede a rebound.
Confirmation on a break above 1.0826 would suggest that immediate selling pressure has been neutralized, setting the stage for a larger upswing. Looking through minor levels, the first major barrier lining up to cap gains thereafter is marked by the September – October 2019 bottom in the 1.0878-84 zone.
EUR/USD 4-hour chart created with TradingView
EUR/USD TRADER SENTIMENT
Retail trader data shows 75.21% of traders are net-long, with the ratio of longs to shorts at 3.03 to 1. The number of traders net-long is 1.83% lower than yesterday and 2.65% higher from last week, while the number of traders net-short is 5.02% higher than yesterday and 11.51% higher from last week.
IG Client Sentiment (IGCS) is typically used as a contrarian indicator, and traders being net-long suggests EUR/USD may continue to fall.Yet positioning is less net-long than yesterday and compared with last week, which warns that EUR/USD may soon reverse higher.
EUR/USD TRADING RESOURCES
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
To contact Ilya, use the comments section below or @IlyaSpivak on Twitter
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.