Euro Technical Price Outlook: EUR/USD Short-term Trade Levels
- Euro updated technical trade levels – Daily & Intraday Charts
- EUR/USD reverses sharply off downtrend resistance on hot US CPI- risk for inflection into parity
- Support 9991-1.0000, 9920s, 9901 (critical)– Resistance 1.0175 (key), 1.0260, 1.0352/85
Euro plunged more than 1.5% off the weekly highs against the US Dollar today on the heels of a hotter than anticipated US inflation read with EUR/USD reversing sharply off key technical resistance. The pullback puts parity back into focus and we’re looking for possible price inflection on a stretch 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 technical setup and more.
Euro Price Chart – EUR/USD Daily
Chart Prepared by Michael Boutros, Technical Strategist; EUR/USD on Tradingview
Technical Outlook: In last month’s Euro Short-term Price Outlook we noted that, “Daily & weekly momentum divergence into these lows highlights the threat to the immediate downtrend into the monthly close.” Euro plunged into Fibonacci support at the 78.6% retracement of the broader 2000 rally at 9901 with price registering the yearly low-day close at 9902 into the start of September before rebounding sharply higher. The recovery was halted at confluent downtrend resistance around the 61.8% retracement of the August decline at 1.0175early in the week. Today’s CPI print fueled a reversal off this resistance zone with price now plunging back towards the July low-day close / parity - risk for price inflection into this zone.
Euro Price Chart – EUR/USD 240min
Notes: A closer look at Euro price action shows EUR/USD trading within the confines of a short-term ascending pitchfork formation extending off August / September lows with the upper parallel capping the rally into the weekly open. Today’s reversal has already broken below the objective weekly & monthly opens – initial support eyed at 9991-1.0000 backed by the lower parallel (currently ~9920s) and the 99-handle. Ultimately, a break / close below this big figure will be needed to mark resumption of the broader downtrend / fuel the next leg lower with such a scenario risking a plunge towards the lower parallels and the June 2000 high at 9701.
Bottom line: Euro has reversed at a critical resistance confluence and the threat remains for a deeper plunge while below 1.0175. From a trading standpoint, look to reduce portions of short-exposure / lower protective stops on a stretch towards parity – rallies should be capped by the monthly high-day close (1.0121) IF price is heading lower on this stretch. Keep in mind the FOMC interest rate decision is on tap next week and likely to fuel added volatility here- stay nimble into the releases. Review my latest Euro Weekly Price Outlook for a closer 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-long EUR/USD - the ratio stands at +1.30 (56.5% of traders are long) – typically weak bearish reading
- Long positions are13.34% higher than yesterday and 19.16% lower from last week
- Short positions are 5.39% lower than yesterday and 25.05% higher from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/USD prices may continue to fall. Traders are more net-long than yesterday but less net-long 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 | -10% | 13% | -1% |
| Weekly | 3% | -5% | -1% |
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- Written by Michael Boutros, Technical Strategist with DailyFX
Follow Michael on Twitter @MBForex
