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EUR/USD Technical Analysis: Euro Poised for New Leg Lower

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  • EUR/USD has been trading sideways for several weeks.
  • Sideways price action is set to give-way to lower levels.

The Pound to Euro exchange war and the impact of Covid-19 on forex markets  - Chronicle Live



The last time I posted commentary on the Euro I was discussing its potential to continue to extend the trend lower off the May high. Nothing has happened over the past week or so to change this outlook, if anything the bias is growing stronger with each day that EUR/USD fails to reverse higher.

The low to watch at the bottom of the recent congestion pattern is 11524, a break below should kick off a new leg lower that will have an important level quickly in focus. The March 2020 spike-high is a meaningful level to watch for a reaction at. It resides at 11495.

A bounce could develop, but is anticipated to be transient in nature as the trend off the May high looks set to persist. Beyond that point the next level to watch is 11423, a swing-high created during the spring of 2020, and in confluence with that level could be the underside trend-line running lower from June.

The June 2020 high and June to current trend-line may not be in confluence if the slide develops slowly. In any event, neither of these levels are major types of support, but should be respected should we see the market react upon testing.

To turn the picture bullish EUR/USD has its work cut out for it. A rally above the downtrend line from May and 11700 is needed to snap the bearish sequence. Even then we would need to see such rally hold up on a pullback without it turning into an outright decline.

For now, continuing to run with a fairly aggressive bearish bias until there is evidence to do otherwise.


EUR/USD daily chart

EUR/USD Chart by TradingView


Written by Paul Robinson, Market Analyst, 10th November 2021. DailyFX

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