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Talking Points:
- EUR/USD Technical Strategy: Flat
- Euro shows signs of topping after retesting trend line from December 2015
- Waiting for confirmation of Harami candle pattern before entering short
The Euro may be vulnerable to losses after the appearance of a bearish Harami candlestick pattern having advanced to a two-month high against the US Dollar. The setup follows a retest of trend line support-turned-resistance set from December 2015 and hints a corrective rebound may have run its course.
Near-term support is at 1.1234, the August 2 high, with a break below that on a daily closing basis opening the door for a test of the August 5 low at 1.1046. Alternatively, a push above double top resistance at 1.1415, a barrier reinforced by the aforementioned trend line, targets the May 3 top at 1.1616.
A Harami pattern is indicative of indecision and does not amount to an actionable reversal signalwithout further confirmation. With that in mind, taking up a short position appears premature and opting for the sidelines seems prudent for now until a more concrete opportunity presents itself.
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