EUR/USD Technical Highlights:
- Notable reversal keeps channel structure in play
- Using it to shape general trading bias
Euro continues to stay within confines of channel
The EUR/USD is at an interesting spot within a robust technical structure. Long-term the Euro appears to be poised for higher prices still, perhaps up to 12500, but price action suggests some more near-term backing-and-filling may develop before that can happen.
Yesterday’s price behavior was marked by a daily reversal off the top off a neatly forming upward consolidation channel. The upward sloping channel, instead of acting as a consolidation pattern, could mark waning momentum and a topping pattern, but we will continue to give the benefit of the doubt to the upside as it still looks constructive.
However, we don’t need to predict or speculate what the outcome will be, just follow the levels and eventual breaking of the pattern.
The key reversal at the top of the channel has EUR/USD set up for a dip back to the lower-end of the structure (on that journey now), where support lies around 11800. There is also a trend-line (lower parallel) rising up from May that could come into confluence and strengthen support.
This would be ideal for determining a make or break point. A hold and turn higher keeps the top-side well intact, while a break below support could indeed mark the beginning of a significantly larger retreat.
Would-be longs could use the bottom-side of the channel for potentially solid risk/reward set-ups, while would-be shorts may be best served for this support to break.
EUR/USD Daily Chart (uptrend, channel/trend-line)
EUR/USD 4-hr Chart
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---Written by Paul Robinson, Market Analyst
You can follow Paul on Twitter at @PaulRobinsonFX
