Euro is trading just above a long-term key Fibonacci support threshold with the weekly / monthly opening-range taking shape just above. These 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.
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EUR/USD Daily Price Chart
Technical Outlook: In my latest EUR/USD Weekly Technical Outlook we noted that Euro was, “testing yearly open / slope resistance and leaves the immediate recovery vulnerable while below 1.1445… Weekly support now rests with the low-week close at 1.1232 with 1.1187still critical.” Price registered a low at 1.1184 yesterday with the weekly opening-range taking shape just above. Its make-or-break here for Euro.
A break / close below would shift the focus to longer-term confluence pitchfork (blue) / channel (red) support around ~1.1130– look for a larger reaction there IF reached. Resistance stands at 1.1285/99 backed by the 61.8% retracement / 100-day moving average at 1.1347/54.
EUR/USD 120min Price Chart
Notes: A closer look at price action shows Euro setting a well-defined weekly opening-range an remains virtually unchanged on the week. It’s too early to rely on this ascending slope, but IF EUR/USD is indeed heading higher, losses should be limited to the lower parallel / ~1.12. A breach above 1.1250 would shift the focus towards the 25% line / 38.2% retracement at 1.1285 backed closely by 1.13.
Ultimately a breach above 1.1347 would be needed to fuel another test of critical resistance at the yearly open around 1.1419/49. Weakness below the key 61.8% retracement of the 2017 advance at 1.1186 keeps the focus on 1.1130.
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Bottom line: We’re looking for a reaction here with the immediate short-bias at risk while above Fibonacci support 1.1186. From a trading standpoint, look for a break of the weekly opening-range for guidance with the topside favored while above 1.12. Keep in mind we’re in the first few days of the month / quarter with US Non-Farm Payrolls (NFP) on tap this Friday- tread lightly.
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
- A summary of IG Client Sentiment shows traders are net-long EUR/USD- the ratio stands at +2.42 (70.8% of traders are long) – bearish reading
- Traders have remained net-long since March 26th; price has moved 0.3% lower since then
- Long positions are7.4% lower than yesterday and 30.3% higher from last week
- Short positions are9.5% higher than yesterday and 23.2% 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. Yet traders are less net-long than yesterday but more net-long from last week, andthe 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 Euro / US Economic Data Releases
Active Trade Setups
– Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex