EUR/USD Rally Stalls
Last week EUR/USD rallied above an important technical resistance confluence that I’ve talked about in my last few daily forecasts. At this point, it will be important to asses whether the breakout is real, or just a trap for buyers.
One important aspect is assessing technical developments is the longer-term trend. For EUR/USD this is certainly to the downside even though price action has been choppy for the past year or so.
For that reason, additional confirmation would provide further conviction that the pair has indeed put in a bottom, or at least, a near-term one.
Currently, resistance from a horizontal level at 1.1059 has been holding the upside and daily closes have been held by the 50-day moving average. I suspect this will continue to be major resistance over the near-term.
A bit of a support confluence is developing in around 1.1000 as the 200 and 50 moving averages on a 4-hour chart have converged toward the level. Further, a rising trendline from October lows and the 20-day moving averages are also nearby. If the pair were to break below this area, I would assume that last week’s upside break was a bull trap.
Daily Technical Outlook
With a relatively light economic calendar in the session ahead, I suspect that the pair will continue to trade within the roughly 1.1000-1.1050 range.
There was some selling pressure around the European open and this might keep the pair well offered, at least until the North American session gets underway. In this context, I see important resistance at 1.1033.
EUR/USD briefly traded below yesterday’s low in early trading, likely taking stops from weak hands. If the pair remains under pressure, I think it will try and trigger further stops below Friday’s low of 1.1001. However, the psychological 1.1000 handle is likely to draw buyers. I see it as major support for the session ahead.
On the other hand, if we reverse sentiment a bit and start to get bullish, I’m looking at 1.1059 to continue capping gains in the near-term.
- EUR/USD has been ranging with the 50-day moving averages holding the pair on a daily close basis.
- I suspect the pair will continue holding in this range considering the light economic calendar.
- Strong selling pressure at the European open suggests a slight bearish bias for the session ahead.
This article was originally posted on FX Empire
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