EURUSD generated extra losses after breaking the neckline of the double top formation with a ceiling at 1.1174 in the four-hour chart – a signal that a trend reversal may be in progress.
The price has breached the 200-period simple moving average (SMA) too on the way down and is currently consolidating around the 50% Fibonacci of the upleg from 1.0878 to 1.1178 as the RSI and the Stochastics are exiting the oversold areas. The MACD also looks to be recovering below its red signal line, though, as long as all indicators remain deep in bearish territory the odds for a meaningful rebound in the price are minimal. It is also worth noting that the 20- and the 200-period SMAs are heading for a bearish cross.
Should downside pressure return, the 61.8% Fibonacci of 1.0992 is expected to deter steeper declines ahead of the 1.0966 support level. Beneath the latter, some consolidation may emerge between the 78.6% Fibonacci of 1.0942 and the former strong barrier of 1.0925, where any violation could open the door for the 1.0903 obstacle.
On the upside, a rally above the 38.2% Fibonacci of 1.1064 and more importantly above the 1.1072 neckline would eliminate the negative sentiment, with buying interest probably increasing towards last week’s high of 1.1092 and the 23.6% Fibonacci of 1.1107. Further up, the 1.1140 resistance could next attract attention.
Looking at the bigger picture, the pair is in a range within the 1.1174 and 1.0878 boundaries and any violation at these edges could determine the future direction in the market.
In brief, EURUSD is searching for a rebound after confirming the creation of a bearish double top pattern below 1.1072. Only a rally above that number would eliminate downside pressures, while an upturn above the 1.1174 ceiling would put the market back on the bullish path in the bigger picture.
Forex trading and trading in other leveraged products involves a significant level of risk and is not suitable for all investors.
Recommended Content
Editors’ Picks
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.