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The Euro fell against the US Dollar as expectedbut technical positioning appears conflicted on where prices are likely to go from here. On one hand, a bounce from support at 1.3721, the 50% Fibonacci retracement, appears corrective in the context of breakdown from a rising channel set from early February. While that seems to offer improved risk/reward parameters to enter short in line with our long-term fundamental outlook, the formation of a bullish Morning Star candlestick pattern casts doubt on the bearish argument. Furthermore, the near-term trading range is a mere 58 pips while 20-day ATR is at 75 pips, warning of an undue skew in risk/reward parameters when using a stop-loss activated on a daily closing basis (as is the case with our strategy). We will remain flat for now.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com