ST Technicals Offer Moment of Reflection in EUR-crosses
DailyFX.com -
Talking Points:
- EURUSD now in symmetrical triangle as it grapples with wedge.
- EURAUD rising channel may come into question below 1.4972.
- December forex seasonality foresaw a modestly weaker Euro.
Short-term technicals may be at odds with long-term perspectives at present moment, putting many of the EUR-crosses on watch for some volatility over the next few days. Even though portfolio rebalancing and overstretched short positioning may be contributing to the recent rebound, a degree of patience is required before engaging the Euro from the short side once more.
The nature of this short covering rally should keep longer-term bears salivating at the opportunity to reload at a better price. Peak bearishness was evident in the week ended November 4, when traders were net-short to the tune of 179.0K contracts.
As of December 9, with short positions being covered, only 136.9K contracts remained. Herein lies the longer-term hope for bears: even as short positions abated from the November 4 to December 9 period, EURUSD still managed to decline by -1.37%.
A reestablishment of short sellers back at the early-November levels could bring about the new wave of downside in the EUR-crosses.
See the above video for technical considerations in EURUSD, EURAUD, and EURGBP.
Read more: Positioning Unwind May be Driving Factor, Not QE, for Euro
--- Written by Christopher Vecchio, Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
Learn forex trading with a free practice account and trading charts from FXCM.
