EUR/USD TECHNICAL ANALYSIS: BEARISH
- Euro tests September low but ultimately gains after ECB stimulus boost
- Rally conspicuously falls short of breaking near-term downward trend
- Trades may wait for greater confirmation before taking conviction bets
Get help building confidence in your EUR/USD strategy with our free trading guide!
The Euro seesawed but ultimately found its way higher even as the ECB reintroduced quantitative easing alongside an interest rate cut that brought its target lending rate deeper into negative territory. Imperviousness to typically negative news flow often speaks to potent underlying strength, but the single currency’s advance also stopped conspicuously short of breaking its near-term downtrend.
Prices now stand squarely at resistance guiding them lower since late June. That barrier is reinforced by former support in the 1.1069-1.1116 area, now acting as an upside hurdle. Breaking above that on a daily closing basis would neutralize near-term selling pressure and set the stage for a move higher to challenge the 1.12 figure. On the downside, the September 3 low at 1.0926 marks the lower bound of a choppy range.
Daily EURUSD chart created in TradingView
An actionable trade setup seems to be absent for now. On one hand, taking up the long side seems comically unattractive from a risk/reward perspective as EUR/USD pushes squarely into resistance. On the other, the absence of a clearly-defined bearish reversal signal warns that betting on bearish resumption is at this point premature. Traders may opt to wait and see before committing one way or another given this backdrop.
EUR/USD TRADING RESOURCES
- Just getting started? See our beginners’ guide for FX traders
- Having trouble with your strategy? Here’s the #1 mistake that traders make
- Join a free 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