EUR/USD Plummets into Technical Trend Support

Euro Price Outlook:

Euro plummeted more than 1.2% against the US Dollar this week with EUR/USD clearing the bottom of a multi-week range in price. The decline puts into focus a key technical support confluence just lower and we’re looking for a reaction there next week IF reached. These are the updated targets and invalidation levels that matter on the EUR/USD weekly price chart. Review my latestWeekly Strategy Webinar for an in-depth breakdown of this Sterling price setup and more.

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Euro Price Chart – EUR/USD Weekly

EURUSD Weekly Price Chart

Chart Prepared by Michael Boutros, Technical Strategist; USD/JPY on Tradingview

Notes:In my last Euro Weekly Price Outlook we highlighted that EUR/USD was approaching a key resistance hurdle at 1.1186-1.1208. We noted that, “From a trading standpoint, look for downside exhaustion ahead of 1.0976/94 for possible long-entries.” Price held below key resistance with this week’s reversal now approaching key support at the yearly low-week close / 61.8% retracement.

A break / close below this threshold would be needed to suggest a larger correction is underway in the Euro with such a scenario once exposing the lower parallels (currently around ~1.09) and the 2016 November high-week, reversal-close at 1.0854. Resistance steady at 1.1186-1.1208– a pivot above this zone would target the first major test of yearly downtrend resistance at the January trendline near ~1.1270s.

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Bottom line:Euro turned just ahead of major confluence resistance with the break of a multi-week range in price risking further losses heading into next week. That said, we’re looking for a reaction / possible exhaustion into confluence support just lower at 1.0976/94. From a trading standpoint, look to reduce short-exposure / lower protective stops on stretch into this threshold – re-assess the reaction there IF reached. I’ll publish an updated Euro Price Outlook once we get further clarity on the near-term EUR/USD technical trade levels.

Euro Trader Sentiment – EUR/USD Price Chart

Euro Trader Sentiment-EURUSD Price Chart

  • A summary of IG Client Sentiment shows traders are net-long EUR/USD – the ratio stands at +1.07 (51.7% of traders are long) – neutral reading
  • Long positions are3.94% higher than yesterday and 30.35% higher from last week
  • Short positions are 2.62% lower than yesterday and 7.84% lower 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 further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger EUR/USD-bearish 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

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— Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

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