Euro Technical Price Outlook: EUR/USD Near-term Trade Levels
- Euro updated technical trade levels – Daily & Intraday Charts
- EUR/USD breakdown accelerates more than 1.4% lower into February open
- Support objectives eyed at 1.1945 & 1.1893 – risk for further losses sub-1.2128
Euro is poised for a fourth consecutive daily decline against the US Dollar with EUR/USD off more than 1.4% this week. A break below the January opening-range lows has fueled leg lower into the start of February with Euro now down more than 3% off the yearly high. The decline is now approaching the first major support objectives and we’re looking for possible price inflection just lower. 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.
Euro Price Chart – EUR/USD Daily
Chart Prepared by Michael Boutros, Technical Strategist; EUR/USD on Tradingview
Technical Outlook: In our last Euro Technical Price Outlook we highlighted that a Euro breakout was underway with, “ the focus on a more significant reaction into confluence resistance near 1.2336. Ultimately a close below the 1.2011 would be needed to suggest a more significant near-term high is in place.” Euro ripped into the 88.6% Fibonacci retracement of the 2018 decline at 1.2336 (high registered at 1.2349) before collapsing into the open of January trade with EUR/USD now probing fresh two-month lows just below the 1.20-handle.
Initial daily support now rests at the August high-close / 23.6% retracement of the 2020 advance at 1.1935/45 with a more critical confluence zone seen just lower at the 100% extension of the January decline at 1.1894- look for a larger reaction there IF reached. Daily resistance eyed at 1.2054/58 with broader bearish invalidation now lowered to the monthly open at 1.2128.
Euro Price Chart – EUR/USD 120min
Notes: A closer look at Euro price action shows EUR/USD trading within the confines of a descending pitchfork formation extending off December / January highs with the recent sell-off breaking below the median-line today in US trade. Initial resistance now back at 1.2005/11 backed by 1.2053- both zones of interest for possible topside exhaustion IF reached. Initial support at 1.1935/45 backed by 1.1894-1.1911 – a break / close below this threshold would likely risk accelerated losses with subsequent objectives eyed at 1.1807.
Bottom line: The Euro breakdown is now approaching the first major support objectives and while the broader focus remains lower, the immediate decline may be vulnerable heading into these upcoming support objectives. From a trading standpoint, look to reduce short-exposure / lower protective stops on a stretch into slope support just lower with a close below 1.1894 needed to fuel the next leg lower. Topside recoveries should be capped by the January low IF price is heading lower. Ultimately a breach / close above the monthly open would be needed to suggest a more significant low is in place. Stay nimble into the February opening range with US Non-Farm Payrolls (NFP) on tap tomorrow. 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
- A summary of IG Client Sentiment shows traders are net-short EUR/USD - the ratio stands at -2.18 (31.42% of traders are long) – typically bullish reading
- Long positions are 0.28% lower than yesterday and 4.86% lower from last week
- Short positions are1.30% lower than yesterday and 4.59% 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 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.
| Change in | Longs | Shorts | OI |
| Daily | -3% | 3% | -1% |
| Weekly | -10% | 16% | -2% |
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- Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex
