EUR/USD Price Outlook: Euro Threatens Breakout– Levels to Know

37
  • EUR/USD recovery in focus as weekly opening-range takes shape just below technical resistance
  • Check out our 3Q projections in our Free DailyFX EUR/USD Trading Forecasts
  • Join Michael for Live Weekly Strategy Webinars on Mondays at 12:30GMT

Euro has rallied more than 1.6% against the US Dollar since the yearly / monthly lows with price carving out a well-defined weekly opening-range just below technical resistance. Its decision time for the bulls- here are the updated targets and invalidation levels that matter on the EUR/USD charts. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

New to Forex Trading? Get started with this Free Beginners Guide

EUR/USD Daily Price Chart

EUR/USD Price Outlook: Euro Threatens Breakout– Levels to Know

Technical Outlook: In our latest EUR/USD Weekly Technical Outlook we noted that Euro had, “responded to long-term support and keeps the focus weighted to the topside while above 1.13.” Price registered a high at 1.1472 yesterday before posting an outside-day reversal candle off slope resistance. Note that Euro has carved a well-defined monthly opening-range and ultimately we’re looking for the break for guidance.

Initial resistance stands at the highlighted trendline confluence, around ~1.1460s with a breach / close above the November opening-range high at 1.15 needed to validate the reversal. Subsequent topside resistance objectives eyed at the 100-Day moving average at ~1.1554 and the 61.8% retracement of the September decline at 1.1586.

Learn how to Trade with Confidence in our Free Trading Guide

EUR/USD 120min Price Chart

EUR/USD Price Outlook: Euro Threatens Breakout– Levels to Know

Notes: A closer look at price action shows Euro straddling the weekly open at 1.1413 with the pair trading within an ascending pitchfork formation extending off the October / November lows. Interim support rests at 1.1345/59 with a bullish invalidation now raised 1.1312/14 – this region is defined by the monthly open & the 61.8% retracement of the monthly advance and converges on a sliding parallel of the dominant slope extending off the 11/14 swing lows (area of interest for possible exhaustion / long-entries IF reached).

Even the most seasoned traders need a reminder every now and then- Avoid these Mistakes in your trading

Bottom line: An outside-day reversal yesterday does cast a bearish tone on price near-term but we’re looking for exhaustion on a move lower for re-entry. From a trading standpoint, I’ll favor fading weakness while above 1.1312 for now with a breach above 1.1516 needed to fuel the next leg higher in price. A break below this formation would shift the focus back towards the yearly lows / low close at 1.1215/18 and the 61.8% retracement down at 1.1187.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

EUR/USD Trader Sentiment

EUR/USD Price Outlook: Euro Threatens Breakout– Levels to Know

  • A summary of IG Client Sentiment shows traders are net-long EUR/USD – the ratio stands at -1.02 (50.6% of traders are long) – neutralreading
  • Long positions are3.3% higher than yesterday and 15.8% lower from last week
  • Short positions are 10.0% lower than yesterday and 26.8% 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. Yet traders are more net-long than yesterday but less net-long from last week and the combination of current positioning and recent changes gives us a further mixed EUR/USD trading bias from a sentiment standpoint. .

See how shifts in EUR/USD retail positioning are impacting trend- Learn more about sentiment!

Relevant EUR/USD Data Releases

EUR/USD Price Outlook: Euro Threatens Breakout– Levels to Know

Economic Calendar – latest economic developments and upcoming event risk. Learn more about how we Trade the News in our Free Guide!

Active Trade Setups

  • AUD/JPY Price Outlook: Reversal Run Plummets into Key Support Zone
  • Gold Price Outlook: Recovery Testing Resistance at Prior Support
  • NZD/USD Price Outlook: Kiwi Rally Approaching Breakout Targets
  • AUD/USD Price Outlook: Aussie Breakout Stalls Ahead of Resistance

– Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex or contact him at mboutros@dailyfx.com

LEAVE A REPLY

Please enter your comment!
Please enter your name here