Euros may look weak, and fundamentally that is hard to argue with

Carol Harmer Charmer Trading

Euros may look weak, and fundamentally, that is hard to argue with.

However, as a technical trader, I have to trade what I see, not what I think.

At the moment, EUR/USD appears to be forming a potential Double Bottom pattern around the 1.14 area. Unless we see a daily close below 1.1400, there is every possibility that buyers will step in at these lower levels and force a corrective move higher.

That does not detract from the longer-term weakness in the Euro. However, this is the first test of the lower end of the pattern and I still subscribe to the old trading adage:

"Double Bottoms often hold. Triple Bottoms rarely do."

Currently, there is very little activity in the Euro, but it is still early. Once London opens I would expect volume and volatility to increase.

For today, watch the Daily Pivot at 1.1454 and the previous low at 1.1410.

Any move into this zone should attract buying interest and support the market.

Should buyers gain control, I believe 1.1517 is the first natural target. Beyond that, if the Double Bottom holds, EUR/USD could work its way towards 1.1570 and potentially 1.1620 by Thursday.

What is also catching my attention is that the technical indicators on the daily charts are beginning to turn bullish.

For shorter-term traders, I would use the 4-hour charts to identify potential entry and exit points.

A daily close below 1.1400 invalidates this bullish scenario.

Until then, I favour a corrective move higher before the next leg lower develops.

Author

Carol Harmer

Charmer Trading

Carol Harmer has over 39 years experience of analysing and trading the world's markets and is undoubtedly one of the most respected technical trader in the world today.

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