Euro Short-term Technical Outlook: EUR/USD Powers Towards Parity

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Euro Technical Price Outlook: EUR/USD Short-Term Trading Levels

  • Euro updated technical trading levels – Daily and Intraday Charts
  • EUR/USD is rallying from key support approaching yearly bearish resistance – inflection risk
  • Support 9850, 9782 (key), 9701– Resistance 9945, 1.0000 (key), 1.0121

Euro rallied more than 4.2% from annual lows with a rebound from key technical support now approaching annual bearish resistance early in the month/quarter. This is the first major test for the EUR/USD recovery and we look for a price reaction for guidance towards the end of the week with US Non-Farm Payrolls (NFP) keying in. These are the updated targets and invalidation levels that are important on the technical prices of EUR/USD. Check out my latest Strategy Blog for an in-depth breakdown of this Euro tech setup and more.

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Euro Price Chart – EUR/USD Daily

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Chart Prepared by Michael BoutrosTechnical Strategist; EUR/USD at Tradingview

Technical Outlook: In last month’s Euro Short-Term Price Outlook we noted that EUR/USD “reversed at a critical resistance confluence and the threat remains for a deeper dive while below 1.0175.” The highs held with a late month plunge taking the Euro into a critical support zone at the 1989 low / 2001 high at 9548/95. The recovery from this threshold is focused towards the October open with price now probing former slope support as resistance early in the week with the annual low only higher – looking for a reaction there IF reached.

Euro price chart – EUR/USD 120min

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Notes: A closer look at Euro price action shows EUR/USD trading within the confines of an imminent ascending fork formation extending from the September lows with the upper parallel further highlighting resistance to parity. An upper break / close above this threshold is needed to suggest that a more significant recovery may occur with such a scenario exposing the September high close at 1.0121 and the September highs near the 1.02-handle. Initial support now back at 9850 supported by the imminent bullish invalidation at the objective weekly / monthly open at 9782. Finally a break / close below the midline / June 2000 high at 9701 would be needed to mark a resumption of the broader downtrend back to the 9548/95 key support zone.

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Bottom line: A bounce from critical support in EUR/USD is now approaching annual downtrend resistance at the start of the month/quarter – looking for a potential run-out/price inflection in the coming days for guidance. From a trading standpoint, look to reduce long exposure / raise protective stops while rallying to equity. Losses should be limited to the weekly opening IF price increases in this stretch. Review my latest Euro Weekly Price Outlook for a closer look at EUR/USD’s longer-term technical trading levels.

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

Euro Trader Sentiment – Price Chart of EUR/USD

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  • Summary of IG Customer Sentiment shows that traders are net long EUR/USD – the ratio stands at +1.38 (57.98% of traders are long) – typically weak bearish reading
  • Long positions are 2.43% lower than yesterday and 25.14% lower than last week
  • Short positions are 7.80% higher than yesterday and 55.93% higher from last week
  • We usually take a contrary view to crowd sentiment, and the fact that traders are net long suggests that EUR/USD prices will continue to fall. However, traders are less net long than yesterday and compared to last week. From a sentiment point of view, the recent changes in positioning warn that the current EUR/USD price trend may soon reverse higher despite the fact that traders remain net-long.




of customers is network long




of customers is net short

Change into

misses

Shorts

Oi

Every day -15% 19% -1%
Every week -37% 99% -5%

Euro/US Economic Calendar

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Economic Calendarlatest economic developments and upcoming event risk

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– Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex



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