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Euro Technical Analysis: EUR/USD, EUR/JPY, EUR/GBP Levels to Watch

Euro Technical Analysis: EUR/USD, EUR/JPY, EUR/GBP Levels to Watch

Daniel Moss, Analyst

Euro Technical Analysis, EUR/USD, EUR/JPY, EUR/GBP, IGCS – Talking Points:

  • EUR/USD to extend climb higher after breaching Bull Flag resistance.
  • EUR/JPY eyeing a push to fresh yearly highs as prices consolidate in a Bull Flag continuation pattern.
  • EUR/GBP coiling up in Symmetrical Triangle. Is a topside break on the cards?
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The Euro looks poised to gain ground against the US Dollar, Japanese Yen and British Pound in the near term. Here are the key technical levels to watch for EUR/USD, EUR/JPY and EUR/GBP rates.

EUR/USD Daily Chart – Break of Flag Resistance Hints at Further Gains

Euro Technical Analysis: EUR/USD, EUR/JPY, EUR/GBP Levels to Watch

EUR/USD daily chart created using Tradingview

EUR/USD rates seem poised to extend its recent push to yearly highs, after slicing through Bull Flag resistance and the psychologically imposing 1.2200 mark.

With the RSI surging back into overbought territory, and the MACD climbing to its highest levels since late August, the path of least resistance continues to favour the upside.

A daily close above the 50% Fibonacci (1.2290) is needed to carve a path to challenge psychological resistance at 1.24, with the Bull Flag’s implied measured move suggesting prices could begin to probe the 61.8% Fibonacci (1.2453) in the near term.

Alternatively, failure to gains a firm foothold above 1.2300 could inspire a short-term pullback towards former resistance-turned-support at the December 4 high (1.2178).

Euro Technical Analysis: EUR/USD, EUR/JPY, EUR/GBP Levels to Watch

The IG Client Sentiment Report shows 30.09% of traders are net-long with the ratio of traders short to long at 2.32 to 1. The number of traders net-long is 14.84% lower than yesterday and 5.06% lower from last week, while the number of traders net-short is 5.64% higher than yesterday and 0.48% 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.

Traders are further net-short than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EUR/USD-bullish contrarian trading bias.

EUR/JPY Daily Chart – Bull Flag in Play

Euro Technical Analysis: EUR/USD, EUR/JPY, EUR/GBP Levels to Watch

EUR/JPY daily chart created using Tradingview

EUR/JPY rates appear to be eyeing a push to fresh yearly highs, as price continues to consolidate in a Bull Flag continuation pattern just shy of key resistance at the 1.2700 mark.

With price tracking firmly above all four moving averages, and the RSI U-turning at 60, hints that an extended topside push could be in the offing.

Gaining a firm foothold above the monthly high (126.74) on a daily closes basis is likely required to validate the bullish pattern and bring the 2019 high (127.50) into focus.

The pattern’s implied measured move suggesting EUR/JPY could climb a further 2% from current level to test psychological resistance at 129.00.

Conversely, a pullback towards the 50% Fibonacci (125.52) could eventuate if flag resistance (126.74) holds firm, with a break below the 21-day moving average (125.47) probably paving the way for prices to challenge the October high (125.08).

Euro Technical Analysis: EUR/USD, EUR/JPY, EUR/GBP Levels to Watch

The IG Client Sentiment Report shows 29.89% of traders are net-long with the ratio of traders short to long at 2.35 to 1. The number of traders net-long is 16.98% lower than yesterday and 2.65% lower from last week, while the number of traders net-short is 4.45% higher than yesterday and 6.18% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EUR/JPY prices may continue to rise.

Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EUR/JPY trading bias.

EUR/GBP Daily Chart – Coiling Up in Symmetrical Triangle

Euro Technical Analysis: EUR/USD, EUR/JPY, EUR/GBP Levels to Watch

EUR/GBP daily chart created using Tradingview

EUR/GBP rates are continuing to coil up within the confines of a Symmetrical Triangle, after failing to gain a firm foothold above resistance at the June high (0.9176).

Although prices have slipped lower in recent days the longer-term outlook continues to favour the upside, as the exchange rate remains constructively positioned above the sentiment-defining 200-DMA (0.8960).

With the RSI and MACD indicator both hovering above their respective neutral midpoints, the path of least resistance seems higher.

Pushing back above the December 16 high (0.9056) would probably generate a topside push to retest confluent resistance at the 61.8% Fibonacci (0.9129) and triangle downtrend. Clearing that likely opens the door for prices to probe the September high (0.9291).

On the other hand, slipping below the 100-DMA (0.9011) could trigger a more extensive pullback and bring psychological support at 0.8900 into the crosshairs.

Euro Technical Analysis: EUR/USD, EUR/JPY, EUR/GBP Levels to Watch

The IG Client Sentiment Report shows 52.46% of traders are net-long with the ratio of traders long to short at 1.10 to 1. The number of traders net-long is 1.10% higher than yesterday and 55.59% higher from last week, while the number of traders net-short is 4.37% lower than yesterday and 33.65% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/GBP prices may continue to fall.

Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EUR/GBP-bearish contrarian trading bias.

-- Written by Daniel Moss, Analyst for DailyFX

Follow me on Twitter @DanielGMoss

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

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