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Euro Dollar Technical Outlook: EUR/USD Defends Monthly Open Support

Euro Dollar Technical Outlook: EUR/USD Defends Monthly Open Support

2020-10-14 15:30:00
Michael Boutros, Strategist
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Euro Technical Price Outlook: EUR/USD Near-term Trade Levels

  • Euro updated technical trade levels – Daily & Intraday Charts
  • EUR/USD carves October opening-range - broader bearish invalidation 1.1859
  • Risk for deeper correction sub-1.1808 – key support 1.1695
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Euro is attempting to snap a two-week winning streak against the US Dollar with EUR/USD carving a well-defined monthly opening-range just below down-trend resistance. The immediate focus is on a break of the weekly price range for guidance with the broader risk tilted to the downside while below the 1.18-handle. These are the updated targets and invalidation levels that matter on the EUR/USD technical price charts. Review my latest Strategy Webinar for an in-depth breakdown of this Euro setup and more.

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Euro Price Chart – EUR/USD Daily

Euro Price Chart - EUR/USD Daily - Euro vs US Dollar Trade Outlook - Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; EUR/USD on Tradingview

Technical Outlook: In our last Euro Technical Price Outlook we noted that EUR/USD had, “rebounded off downtrend support and the focus is on this near-term recovery,” with the broader risk lower sub-1.1859. Price registered a high at 1.1831 last week before faltering with the monthly opening-range taking shape just above the 1.17-handle.

Key resistance / bearish invalidation remains steady at 1.1853/59– a region defined by the 100% extension of the late-September advance and the 61.8% Fibonacci retracement of the September range. A breach / close above this threshold would be needed to mark resumption of the broader uptrend towards 1.1961. A break of the monthly range lows at 1.17 would risk a larger correction with such a scenario exposing the lower parallels / October 2018 highs / September low-day close at 1.1621/27 – look for a larger price reaction there IF reached.

Euro Price Chart – EUR/USD 120min

Euro Price Chart - EUR/USD 120min - Euro vs US Dollar Trade Outlook - Technical Forecast

Notes: A closer look at Euro price action sees EUR/USD within a set of ascending parallels (red) with an embedded descending pitchfork extending off the monthly highs guiding the recent pullback. The immediate focus is on a break of the 1.1719-1.1789 range for guidance with the near-term risk weighted to the downside while below weekly open resistance at 1.1808. Ultimately, a break below confluence support at 1.1695-1.1700 is needed to keep the short-bias viable towards 1.1659 and 1.1621.

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Bottom line: Euro is testing monthly open support today with the October opening-range now set. From a trading standpoint, the risk remains for a deeper setback while below the weekly open – be on the lookout for topside exhaustion ahead of 1.18 IF price is heading lower with a break below 1.1695 needed to fuel a deeper correction. Ultimately a deeper price correction may offer more favorable opportunities closer to trend support with breach above the 1.1859 needed to mark resumption of the broader uptrend. Review my latest Euro Weekly Price Outlook for an in-depth look at the longer-term EUR/USD technical trade levels.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Euro Trader Sentiment – EUR/USD Price Chart

Euro Trader Sentiment - EUR/USD Price Chart - Euro vs US Dollar Trade Outlook - Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-short EUR/USD - the ratio stands at -1.51 (39.77% of traders are long) – weak bullish reading
  • Long positions are 2.69% higher than yesterday and 6.77% higher from last week
  • Short positions are7.82% lower than yesterday and 8.21% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/USD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current EUR/USD price trend may soon reverse lower despite the fact traders remain net-short.
EUR/USD BULLISH
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Change in Longs Shorts OI
Daily -9% 6% 2%
Weekly -28% 25% 5%
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- Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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