EUR/USD outlook: Completion of bearish pattern on daily chart adds to downside risk

Slobodan Drvenica Windsor Brokers

EUR/USD

The Euro is holding in a narrow consolidation near one-month low in European session on Tuesday. Near-term focus is shifting to the downside, as strengthening dollar on fresh hopes of Fed’s further rate hikes weighs and additional pressure came from disappointing German data which showed a significant drop in country’s industrial production.

Daily studies show rising negative momentum and moving averages (10/20/30) in bearish configuration, with completion of three black crows bearish pattern contributing to negative signals.

Bears pressure initial Fibo support at 1.0679 (23.6% of 0.9535/1.1032) reinforced by rising 55DMA (1.0663), break of which would generate fresh bearish signal and expose strong support at 1.0564 (top of rising thick daily cloud), followed by targets at 1.0483/60 (Jan 6 higher low / Fibo 38.2%).

Caution on strongly oversold stochastic which warns that bears may pause for consolidation in coming sessions.

Broken daily Kijun-sen (1.0757) reverted to solid resistance which should ideally cap, though extended upticks under south-turning daily Tenkan-sen (1.0864) would keep near-term bearish bias in play.

Res: 1.0757; 1.0798; 1.0864; 1.0940.
Sup: 1.0679; 1.0663; 1.0564; 1.0483.

Interested in EUR/USD technicals? Check out the key levels

1. R3 1.0872
2. R2 1.0835
3. R1 1.0782
PP 1.0746
1. S1 1.0693
2. S2 1.0657
3. S3 1.0604

Author

Slobodan Drvenica

Windsor Brokers

Industry veteran with over 22 years’ experience, Slobodan Drvenica joined Windsor Brokers in 1995 when he was an active trader for more than 10 years, managing the trading desk and own account departments.

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