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Talking Points:
- EUR/USD Technical Strategy: Short at 1.2710
- Support: 1.2500, 1.2316, 1.2140
- Resistance:1.2746, 1.2852, 1.3070
The Euro appears to be returning to the down trend against the US Dollar after completing a Flag continuation pattern last week. A daily close below support in the 1.2500-34 area marked by the October 3 low and the 23.6% Fibonacci expansion exposes the 38.2% level at 1.2316. A Hammer candle hints a near-term bounce may be in the cards however. A turn above trend line resistance at 1.2746 clears the way for a challenge of the 23.6% Fib retracement at 1.2852.
We entered short EURUSD at 1.2710 in line with our long-term fundamental outlook, initially targeting 1.2534. A stop-loss will be triggered on a daily close above 1.2886. We will take profit on half of the position and move the stop-loss to breakeven once the first objective is reached.
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Daily Chart – Created Using FXCM Marketscope 2.0
— Written by Ilya Spivak, Currency Strategist for DailyFX.com