Forex Strategy: EUR/USD Evening Star Warns Of Significant Correction
- EUR/USD Technical Strategy: Shorts Preferred
- Evening Star pattern on the weekly chart warns of declines but awaits confirmation
- Intraday gains may be limited with Inverted Hammer seeing little follow-through
The emergence of a second Hanging Man candlestick formation on the daily suggests that EUR/USD may come under renewed selling pressure. The bearish reversal pattern is made more noteworthy by its appearance near former support-turned-resistance at 1.3832. Fresh declines for the pair are likely to be met by buying support near the 1.3765 mark.
EUR/USD: Bears Emerge Following Hanging Man
Daily Chart - Created Using FXCM Marketscope 2.0
Drilling down to the four hour chart; an InvertedHammer formation has warned of an intraday bounce for EUR/USD. However follow-through has been limited, which suggests the signal may have been overlooked by traders given noteworthy resistance at 1.3805 is hanging nearby.
EUR/USD: Inverted Hammer Sees Lackluster response
4 Hour Chart - Created Using FXCM Marketscope 2.0
Finally, taking a look at some broader context provided the weekly chart; the Evening Star formation that has emerged shy of the key 1.4000 is a notable warning signal of further declines ahead. Confirmation of the bearish reversal pattern would raise the likelihood of a correction towards the 1.3480 support level.
EUR/USD: Evening Star Awaits Confirmation
Weekly Chart - Created Using FXCM Marketscope 2.0
By David de Ferranti, Market Analyst, FXCM
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.