Euro Short-term Technical Outlook: EUR/USD Bulls Eye Range Resistance

Euro Technical Outlook: EUR/USD Short-term Trade Levels

• Euro June rally exhausts into uptrend resistance- risk for correction near-term
• EUR/USD multi-month consolidation breakout in focus – CPI, PPI on tap
• Resistance ~1.0860s, 1.0879/88 (key), 1.0933/39 - Support 1.0792/94, 1.0755, 1.0724/34 (key)

Euro snapped a seven-day winning streak yesterday with EUR/USD trading just below multi-month resistance. Price continues to contract into the apex of a massive consolidation pattern and the focus is on a possible breakout in the weeks ahead. These are the updated targets and invalidation levels that matter on the Euro short-term technical charts.

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Euro Price Chart – EUR/USD Daily

Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView

Technical Outlook: In last month’s EUR/USD Short-term Technical Outlook we noted that, “For now, the monthly opening-range is defined by the June 3^rd candle- look for a breakout of this range and watch the weekly closes here for guidance.” The range broke lower the following day with a three-week decline of more than 2.2% off the monthly highs. EUR/USD rebounded off the 78.6% retracement of the April advance at 1.0668 into the close of the month with the bulls mounting a rally of more than 1.6% off the June low.

Euro has been trading within the confines of a massive consolidation pattern since the December highs with this recent advance looking a bit vulnerable here just ahead of slope resistance- risk for some pullback.

Euro Price Chart – EUR/USD 240min

Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView

Notes: A closer look at Euro price action shows EUR/USD trading within the confines of an ascending pitchfork formation extending off the June lows the recent advance exhausting into the 75% parallel late-last week. The immediate focus is on a breakout of the weekly opening-range (1.0803-1.0845) for guidance with the near-term outlook still constructive while within this formation.

Initial support rests with the 200-day moving average / April open at 1.0792/94 and is backed by the lower parallel / 50% retracement near 1.0755- losses should be limited to this threshold IF price is heading higher on this stretch.  Near-term bullish invalidation now raised to the objective June open / 61.8% Fibonacci retracement at 1.0725/35- a break below this level would threaten a test of range support (sub-1.07).

Topside resistance is eyed at the highlighted slope confluence (~1.0860s) and is backed closely by the June high-day close (HDC) / 1.618% extension of the late-June advance at 1.0879/88- look for a larger reaction there IF reached with a break / close above needed to validate a breakout of the yearly consolidation pattern towards the 61.8% retracement / March (HDC) at 1.0933/39- an area of interest for possible topside exhaustion / price inflection IF reached.  

Bottom line: The Euro recovery is now approaching the upper bounds of a massive multi-month consolidation pattern. While the immediate advance may be vulnerable here, the near-term outlook remains constructive while within this formation. From a trading standpoint, look to reduce long-exposure / raise protective stops on a rally towards the upper parallels- losses should be limited to 1.0755 IF price is heading higher on this stretch with a close above 1.0888 needed to validate a larger price breakout.

Note that key US inflation data is on tap later this week with the Consumer Price Index (CPI) and Producer Price index (PPI) slated for Thursday and Friday respectively. Watch the weekly closes here and look for a breakout of the monthly opening-range for further guidance. Review my latest Euro Weekly Technical Forecast for a closer look at the longer-term EUR/USD trade levels.

Key EUR/USD Economic Data Releases

Economic Calendar - latest economic developments and upcoming event risk.

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--- Written by Michael Boutros, Sr Technical Strategist with FOREX.com

Follow Michael on Twitter @MBForex