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TECHNICAL STRATEGY EUR / USD: BEARISH
- The euro drops after showing a bearish candlestick pattern at resistance
- Five-day losing streak: prices challenge key support level
- Traders can look for improved risk / return before creating new shorts
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The euro has declined against the US dollar expected after applying a candlestick pattern to Cloud Cloud Cover's dark cover on a 13-month downtrend resistance test. In fact, the single currency has now suffered five consecutive days of losses, the longest since October.
This puts the currency pair at an essential support that is guiding the sharp rise since mid-November, currently at 1.1308. A daily close below this barrier paves the way for a test of November 12th low at 1.1216. The resistance of the trend line is now in the 1.1395-1.1479 zone, followed by an inflection zone in the 1.1543-54 zone.
At present, the proximity of prices with immediate support could make the establishment of new short positions unattractive from the point of view of risk / return. Traders may consider pending waiting for a confirmation of a break or corrective rebound that alters this calculation as being the most conservative.
TRADING RESOURCES EUR / USD
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
To contact Ilya, use the comments section below or @IlyaSpivak on Twitter
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