EUR/USD Technical Analysis: Three-Month Support Under Pressure

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EUR/USD TECHNICAL STRATEGY: BEARISH

  • Euro drops after showing bearish candlestick pattern at resistance
  • Five-day losing streak brings prices to challenge key support level
  • Traders may seek improved risk/reward before entering new shorts

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The Euro declined against the US Dollar as expected after putting in a bearish Dark Cloud Cover candlestick pattern on a test of 13-month downtrend resistance. In fact, the single currency has now suffered five consecutive days of losses, the longest such run since October.

This puts the currency pair at pivotal support guiding the choppy rise since mid-November, now at 1.1308. A daily close below this barrier sets the stage for a test of the November 12 low at 1.1216. Trend line resistance is now in the 1.1395-1.1479 area, followed by an inflection range in the 1.1543-54 zone.

EUR/USD Technical Analysis: Three-Month Support Under Pressure

As of now, prices’ proximity to immediate support might make establishing new short positions unattractive from a risk/reward perspective. Traders may view waiting on the sidelines for confirmation of a break or a corrective bounce that alters this calculus as most prudent.

EUR/USD TRADING RESOURCES

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  • Having trouble with your strategy? Here’s the #1 mistake that traders make
  • Join a free Trading Q&A webinar and have your questions answered

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

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