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Talking Points:
- EUR/USD Technical Strategy: Flat
- Euro Turns Lower as Expected After Forming Bearish Candle Setup
- Opting Against Initiating Short Position on Risk/Reward Grounds
The Euro moved lower against the US Dollar as expected after prices produced a bearish Dark Cloud Cover candlestick pattern. The pair has now produced the largest two-day decline in a month.
From here, the next layer of support comes in at 1.1146, the 50% Fibonacci expansion. A daily close below this barrier exposes the next downside threshold at 1.1072, the 61.8% level. Alternatively, a rebound back above the 38.2% Fib at 1.1220 opens the door for a test of the 23.6% expansion at 1.1311.
An actionable trading opportunity remains absent for now. The available trade range is 74 pips, which suggests prices are wedged too closely between near-term support and resistance to justify taking a position from a risk/reward perspective given an ATR reading of 121 pips. We will remain for now, waiting for a more compelling short trade setup to emerge.
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