EUR/USD Update: Moderate recovery


22 JUN 2018

The recent bounce has left a double bottom pattern on the intraday chart. This is all not very surprising, especially with vicinity of the major weekly support zone around 1.1450 (see our outlook of 29 May). Less obvious is the next move. We see some recovery towards 1.1830 or roughly 1.1940. The big question is whether such a recovery is part of large scale base building on the longer term, or merely a relief of pressure for a few weeks.

Due to the momentum in other USD crosses we prefer the latter scenario. A long term reversal higher is also much more likely after a serious test (i.e. flush low) of the weekly pivots at 1.1450. In other words, we see a near term bounce, followed by a renewed sell-off towards Рand beyond Р1.1450 before any real improvement can be attempted.

Because of this contradicting outlook on the various time frames we consider trading quite risky. We are avoiding the market and prefer to look for a peaking in the zones around 1.1830 and 1.1940 before shorting again.

  • Near term trend: negative
  • Long term trend: neutral
  • Outlook: difficult market phase, possible long-term trend reversal
  • Strategy: exit-short and avoid for now
  • Support: 1.1530 / 1.1450 / 1.1420 / 1.1210-
  • Resistance: 1.1830 / 1.1920 / 1.2030 / 1.2150+
  • Outlook cancelled/neutralized: n/a

420-minute chart Euro / US Dollar