Euro Continuation Prospects after Fresh Highs


Euro is up more than 3.5% off the yearly lows with the advance breaking through monthly open resistance today in New York trade. Here are the updated targets and invalidation levels that matter on the EUR/USD charts this week. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

EUR/USD Daily Price Chart

Technical Outlook: Euro broke above confluence slope resistance yesterday around ~1.1660 with the rally now besting the August opening-range highs. Note that daily RSI has broken back above the former support trigger with daily momentum stretching into highs not seen since February. Seasonal tendencies (heading into September) favor Euro strength and the focus remains weighted to the topside in price while above 1.1510/29.

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EUR/USD 120min Price Chart

EUR/USD Price Chart - 120min

Notes: In last week’s EUR/USD Scalp Report, our bottom line noted that, “From a trading standpoint, the immediate threat may be for a pullback but the outlook remains constructive while above the weekly open for now. I’ll favor fading weakness targeting a topside breach of this pivot range.” Price broke above the 1.1529 resistance pivot in the following days with a pullback and subsequent reversal further validating our directional bias.

Euro has continued to trade within this near-term ascending channel off the monthly lows with the upper parallel highlighting immediate topside targets along the July high-day close at 1.1750 and the 38.2% retracement / July high at 1.1780/91. Interim support now rests at 1.1650 with near-term bullish invalidation raised to 1.1614.

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Bottom line: Euro has broken above the August open / monthly opening range highs and keeps the focus higher into the close of the month. That said, price has now extended higher for the third consecutive day and from a trading standpoint, we’re looking for near-term weakness to offer more favorable long-entries while within this near-term formation. Look for a bigger reaction on a rally into key near-term resistance at 1.1780/90.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

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EUR/USD Trader Sentiment

EUR/USD Trader Sentiment

  • A summary of IG Client Sentiment shows traders are net-short EUR/USD – the ratio stands at -1.33 (42.9% of traders are long) – weak bullishreading
  • traders have remained net-short since August 21st; price has moved 1.3% higher since then
  • Long positions are7.2% lower than yesterday and 10.0% lower from last week
  • Short positions are 6.1% higher than yesterday and 8.5% 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!

Relevant EUR/USD Economic Data Releases

EUR/USD Economic Calendar

Economic Calendarlatest economic developments and upcoming event risk. Learn more about how we Trade the News in our Free Guide!

Trade Setups in Play

– Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex or contact him at mboutros@dailyfx.com





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