On this collection we scale-back and try the broader technical image to achieve a bit extra perspective on the place we’re in pattern. Euro responded to a key technical assist confluence late-last month with the primary day of November commerce on tempo to submit the most important single-day advance since late-September. Here are the important thing targets & invalidation ranges that matter on the EUR/USD weekly chart. Assessment this week’s Technique Webinar for an in-depth breakdown of this setup and extra.
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EUR/USD Weekly Worth Chart
Notes: In October’s EUR/USD Weekly Technical Perspective, we examined the specter of additional losses for the Euro with our ‘backside line’ noting that, “A break / shut beneath (1.1498) would invalidate the reversal play with such a situation concentrating on the yearly low-week shut at 1.1436 backed by the 200-week transferring common / slope assist at ~1.1330 and the 1.13–deal with.” A late-break of the month-to-month opening-vary lows fueled accelerated losses with worth registering a low at 1.1302 on the final day of October commerce. So was remaining washout?
The jury continues to be out, however there are some attention-grabbing technicals observations to think about. Notice that the US Greenback Index (DXY) registered a contemporary yearly low this week whereas EUR/USD didn’t (neither did GBP/USD for that matter). This divergence in worth is commonly exhibited at main market turns / reversals and will increase the specter of worth exhaustion. Additionally be aware that sentiment has reversed from extremes in net-long positioning not seen since April 2017- which ended up being the origin of the 2017 advance.
Whereas these observations are fairly compelling, it doesn’t imply the bulls are out of the woods simply but. A break / weekly shut sub-1.13 would depart Euro weak to additional losses with such a situation concentrating on 61.eight% retracement of the 2017 advance in addition to the at 1.1186 backed by broader bullish invalidation on the slope confluence close to 1.10.
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Backside line: EUR/USD has responded to long-term uptrend support-confluence at 1.13– a area outlined by the November 2016 swing excessive, the 2018 swing low and the 200-week transferring common. Watch the weekly shut – a break / shut above the August low-week shut at 1.1436 can be wanted to alleviate a number of the stress right here with subsequent resistance eyed on the September high-week reversal shut at 1.1603. Broader bearish invalidation is regular on the 38.2% retracement of the yearly vary at 1.1780.
From a buying and selling standpoint, a great place to cut back short-exposure / decrease protecting stops and be looking out for indicators of exhaustion early within the month. US Non-Farm Payrolls are on faucet tomorrow with the Mid-term Elections and the FOMC rate of interest determination looming subsequent week. Keep nimble into the month-to-month open- I’d count on failure quite early within the month if this rebound is only a fake-out. I’ll publish an up to date EUR/USD scalp report as soon as we get additional readability on near-term worth motion.
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EUR/USD Dealer Sentiment
A abstract of IG Shopper Sentiment exhibits merchants are net-long EUR/USD – the ratio stands at +1.78 (64.1% of merchants are lengthy) – bearish studying
Traders have remained net-long since October 1st; worth has moved 1.7% decrease since then
Lengthy positions are9.9% decrease than yesterday and a couple of.four% increased from final week
Quick positions are 2.5% decrease than yesterday and 18.three% decrease from final week
We sometimes take a contrarian view to crowd sentiment, and the actual fact merchants are net-long suggests EUR/USD costs could proceed to fall. Nevertheless dealer are much less net-long than yesterday however extra net-long from final week and the mixture of present positioning and up to date adjustments provides us an additional blended EUR/USD buying and selling bias from a sentiment standpoint.
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Related EUR/USD Information Releases
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Earlier Weekly Technical Charts
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— Written by Michael Boutros, Technical Forex Strategist with DailyFX
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