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The Euro recoiled from double-top resistance in the 1.3800-31 area, undoing last week’s piercing of a falling trend line set from late October and completing a bearish Dark Cloud Cover candlestick pattern. A push below the 23.6% Fibonacci expansion at 1.3726 initially exposes the 38.2% level 1.3665. A move back above the trend line (now at 1.3763) aims for the 1.38 figure anew.
A short position in line with our long-term fundamental outlook looks unattractive from a risk/reward perspective with prices so close to support. As such, we will stand aside for now waiting for another entry point after our previous attempt to sell the pair was stopped out at breakeven.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com