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Euro Outlook: EUR/USD Breakout Fails Resistance- Election Rally Over?

Euro Outlook: EUR/USD Breakout Fails Resistance- Election Rally Over?

2020-11-10 18:00:00
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 threatening false breakout – reversal off yearly high-day close
  • Risk for deeper correction sub-1.1890 – key support 1.1724
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Euro snapped a four-day winning streak against the US Dollar yesterday with EUR/USD reversing off technical resistance to fall more than 0.9% off the weekly highs. The losses take price back below trend resistance and threatens the post-election rally in the days ahead. 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 heading into the elections, EUR/USD was, “testing a key support zone at the October 2018 high / 61.8% extension at 1.16.21/33.” Multiple tests of this threshold held into election day with the subsequent rally breaching confluence resistance at 1.1859 last week. Euro registered an intraday high just pips above the yearly high-day close at 1.1911 yesterday before reversing sharply back below slope resistance- was this a false breakout?

Initial daily support now eyed at 1.1761 backed the 61.8% Fibonacci retracement of the November range at 1.1724- a break / close below this threshold would suggest a more significant high was registered this week witch such a scenario exposing 1.1667 and 1.1621.

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 trading within the confines of an ascending pitchfork formation extending off the September / November lows. Yesterday’s reversal off lateral resistance at 1.1911 takes price back into median-line support– the weekly opening-range is set and we’re looking for the break to offer guidance. Initial resistance back at 1.1859 with near-term bearish invalidation now set to the weekly open at 1.1890.

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Bottom line: Euro is threatening a false breakout here after reversing off the yearly high-day close. From at trading standpoint, the threat remains for a deeper pullback while below the weekly open at 1.1890 – look for topside exhaustion ahead of this threshold IF price is heading lower. Ultimately, a larger correction may offer more favorable opportunities with a breach above 1.1911 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 -2.72 (26.9% of traders are long) – bullish reading
  • Long positions are 1.96% lower than yesterday and 46.49% lower from last week
  • Short positions are7.27% lower than yesterday and 49.22% higher 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. Traders are less net-short than yesterday but more net-short from last week. The combination of current positioning and recent changes gives us a further mixed EUR/USD trading bias from a sentiment standpoint.
EUR/USD BEARISH
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 21% -4% 3%
Weekly 17% -7% -1%
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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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