Euro May Fall vs. US Dollar If Chart Support Under 1.18 Gives Way
EURO, US DOLLAR, EUR/USD, TECHNICAL ANALYSIS – TALKING POINTS:
- Euro upswing fizzles, producing ominous Shooting Star candlestick
- Bearish reversal confirmation seems to call for a push under 1.1770
- Lasting gains appear to require reclaiming a foothold above 1.20
A spirited Euro rebound against the US Dollar may be running out of steam. Prices put in a dramatic-looking Shooting Star candlestick on a retest of resistance near the 1.18 figure, marked by the a former swing high as well as a recently broken rising trend line dating back to late 2020. That speaks to indecision, which may precede capitulation and lead the way toward resumption of the broader decline from the peak in May.
Confirmation of reversal is elusive for now however. Zooming into the 8-hour chart, prices bolster the case for topping with the appearance of a bearish Evening Star candlestick pattern but former breakout resistance near the 1.18 figure remains in place as support, as does an upward-sloping trendline guiding recent gains. This paints the current pullback as corrective for the time being. A close under 1.1770 may change that.
On the topside, a dense block of back-to-back resistance barriers warns that betting on lasting bullish follow-through may be premature even as sellers’ effort to turn the tide remains incomplete. Congestion areas in the 1.1844-87 and 1.1952-84 zones follow back-to-back after one another, so opening the door for a truly expansive rise appears to be a herculean task. If 1.20 can be firmly retaken, 1.21 may follow soon thereafter.
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--- Written by Ilya Spivak, Head Strategist, APAC at DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.