EUR/USD TECHNICAL ANALYSIS: NEUTRAL
- Euro may bounce vs US Dollar after Bullish Engulfing candle setup forms
- Four-hour chart warning that key resistance levels remain intact for now
- Retail trader sentiment studies hint sellers may soon retake the initiative
The Euro stalled at support-turned-resistance in the 1.1070-1.1103 area – a barrier reinforced by a recently broken downward-sloping barrier set from September 2018 – having recoiled from highs near the 1.15 figure (as expected). The appearance of a Bullish Engulfing candlestick pattern here suggests that a rebound may be brewing ahead.
The first layer of resistance is at 1.1219, the 23.6% Fibonacci expansion. A break above that confirmed on a daily closing basis initially exposes the 38.2% level at 1.1324. Neutralizing scope for gains and animating sellers in earnest probably requires a reversal through immediate support as well as the 1.0992-1.1009 support shelf. That would put the 1.0783-1.0880 inflection zone back into focus.
EUR/USD daily chart created with TradingView
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Zooming in to the 4-hour chart for a look at near-term positioning warns against over-extrapolating the case for recovery. Prices have broken the bounds of the uptrend from late February and remain capped by resistance in the 1.1185-1.1214 region, a threshold reinforced by a falling trend line established from the March 8 high. Breaking these barriers seems necessary to overturn the immediate bearish bias.
EUR/USD 4-hour chart created with TradingView
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EUR/USD TRADER SENTIMENT
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Retail positioning data shows 56.09% of traders are net-short, with the short-to-long ratio at 1.28 to 1. IG Client Sentiment(IGCS) is typically used as a contrarian indicator, sothe net-shortskew in traders’exposure suggests that EUR/USD may continue to rise.
However, the number of traders net-short is lower than yesterday and down a non-trivial 25.37 percent compared with the prior week.This suggests that – despite the overall skew in retail exposure – EUR/USD may soon face selling pressure.
See the full IGCS sentiment report here.
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
