Euro is has plummeted more than 4.6% against the US Dollar since the start of the year with EUR/USD registering fresh yearly lows into the open of October trade. While the broader outlook remains tilted to the downside, the recent decline now takes price into trend support and may limit losses in the medium-term. These are the updated targets and invalidation levels that matter on the EUR/USD weekly price chart. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Euro price setup and more.
Euro Price Chart – EUR/USD Weekly
Notes: In my previous EUR/USD Price Outlook we noted that, “Euro has made another rebound off downtrend resistance into the start of the week / month / quarter and the threat remains for an exhaustion low in price into the open. ” Price has rallied nearly 1% off the fresh yearly lows registered last week with Euro continuing to coil / contract into key long-term slope support. The immediate focus in the weeks ahead is on price stabilization above this parallel (red) – from a trading standpoint, the short-bias remains at risk heading into 1.0814/54 – look for a reaction in price there IF reached.
Initial resistance stands with the June trendline, currently around ~1.1020s with a breach / close above needed to suggest a more significant low was registered last week. Subsequent resistance objectives at 1.1107 with key resistance steady at 1.1187-1.1209. A break / close below 1.0814 would be needed to mar resumption of the broader downtrend with such a scenario targeting the March 2017 outside-week reversal close at 1.0657.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom line: Euro is contracting just above major downslope support and leaves the broader short-bias vulnerable into these lows. From a trading standpoint, look to reduce short-exposure / lower protective stops down here. Ultimately, we’re on the lookout for a near-term exhaustion low to give way to larger recovery while above 1.0814 in the fourth quarter. Review my latest Euro Price Outlook for a closer look at the near-term EUR/USD technical trading levels.
Euro Trader Sentiment – EUR/USD Price Chart
- A summary of IG Client Sentiment shows traders are net-long EUR/USD – the ratio stands at +1.02 (49.5% of traders are long) – neutral reading
- Long positions are6.1% lower than yesterday and 25.8% lower from last week
- Short positions are 6.4% higher than yesterday and 74.6% higher 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 further net-short than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger EUR/USD-bullish contrarian trading bias from a sentiment standpoint.
See how shifts in EUR/USD retail positioning are impacting trend- Learn more about sentiment!
Previous Weekly Technical Charts
— Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex
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