EUR/USD Technical Analysis: Euro Eyes Break of 2020 Downtrend
EUR/USD TECHNICAL ANALYSIS: BEARISH
- Euro poised to overcome early-2020 downtrend, exposing the 1.12 mark
- Longer-term chart setup hints recent gains corrective within downtrend
- Retail trader sentiment studies argue for continued EUR/USD recovery
The Euro is flirting with breaking its 2020 downtrend after launching a recovery from a three-year lowagainst the US Dollar,as expected. A daily close above support-turned-resistance in the 1.0992-1.1009 area would violate the series of lower highs set from the beginning of the year,
In this scenario, EUR/USD seems likely to have scope for a test of back-to-back resistance levels running up through the upper bound of recently broken upward-slowing support set from October 2019, now recast as resistance. Closing above that – now just below 1.12 – appears to be a pre-requisite to make the case for lasting upside follow-through.
EUR/USD daily chart created with TradingView
Zooming out to the weekly chart, the longer-term downtrend in play since mid-2018 remains firmly intact. This paints recent gains as broadly corrective, at least for now. Traders may thus treat the rise as a selling opportunity if concrete signs of topping appear to take shape at trend resistance.
EUR/USD weekly chart created with TradingView
EUR/USD TRADER SENTIMENT
Retail sentiment data shows 52.02% of traders are net-short, with the short-to-long ratio at 1.08 to 1. The number of traders net-short is 33.78% higher than yesterday and 79.92% higher from last week, while the net-longcount is 32.91% lowerthan yesterday and 53.11% lower from last week.
IG Client Sentiment(IGCS) is typically used as a contrarian indicator, and traders being net-short suggests EUR/USD may continue to rise.Traders are further net-short than yesterday and last week, which offers a stronger bullish sentiment-derived trading bias.
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.