EUR/USD bears showing the market who is in charge, price now below H&S
- EUR/USD below H&S confirming a completion of top formation
- Market deems that today's action from the ECB was indeed a dovish taper
- DXY topping higher after Fed/ECB divergence
EUR/USD is making further losses and is now below the neckline of the H&S on the daily sticks confirming the top formation as the DXY scores fresh highs at 94.71 with a final push into the close.
As a recap, EUR/USD broke to test the bull's commitments at the crucial 100 DMA (1.1672) where the daily H&S bearish neckline area at 1.1650, (26th July low, 5th Oct low of 1.1669 and 1.1662 ( daily H&S Aug.17th low)) is located.
A dovish ECB taper cements a firmer DXY, bearish EUR/USD
This move came on the back of the ECB's announcements that markets regard as a dovish taper. The benchmark US 10-year yields made a final push at the finish line to 2.4572% fresh closing high while the Fed fund futures yields remain elevated, pricing the chance of a December rate hike at 95%.
EUR/USD levels
- Support levels: 1.1640, 1.1620 and 1.1585.
- Resistance levels: 1.1720, 1.1770 and 1.1825.
Valeria Bednarik, chief analyst at FXStreet explained that, technically, and despite the pair has lost over 150 pips since pre-ECB's levels, it's poised to extend its decline.
"It's poised to extend its decline having accelerated far below all of its moving averages in the 4 hours chart and with technical indicators in the mentioned time frame heading sharply lower within bearish territory and near oversold levels. Below the mentioned 1.1660 level, large stops should be accumulated, therefore resulting in further declines with 1.1620 as the immediate support," Valeria explained.
Author
Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.
