As I was looking for yesterday, the euro has now had the breakdown of the big head and shoulders top pattern confirmed with a second daily close below the key support at $1.3475. The implied target for the medium to longer term is now $1.3000. All technical indicators now look very bearish and the outlook suggests only downwards from here. The only caveat to the bear picture is that the RSI is now around 29 and is beginning to look stretched. Whilst the RSI can sustain below 30 for a period of time the chances of a technical rally are growing. That makes the immediate strategy a bit tricky as to whether you should chase the euro lower or wait for a bounce to sell into. The riskiest strategy of all would be to buy the euro, but this is not recommended. There is a band of resistance now that starts at $1.3475 and then at $1.3500 and $1.3550. I would be looking for a bounce to sell into. The next downside target is at $1.3375 which is the downside target from the original double top.
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.