- EUR/USD Technical Strategy: Sidelines Preferred
- Prices stall near critical 1.3800 handle as bearish reversal pattern forms
- Evening Starcandlestick formation on the weekly offers warning signal
The EUR/USD bulls have lost their grip on prices following a test of the key 1.3800 handle in intraday trade. While the Hammer formation on the daily had suggested a potential run on the 1.3840 mark, given the fading upside momentum for the pair, fresh gains may be limited.
Daily Chart - Created Using FXCM Marketscope 2.0
Drilling down to the four hour chart; a Bearish Engulfing pattern appears to be forming that may be warning of weakness ahead for the Euro. However, the second candle has yet to close and receive confirmation from a successive down period, which leaves a neutral bias preferred at this stage.
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. The pattern has received confirmation from a successive down week which raises the likelihood of an eventual correction towards the 1.3480 support level.
EUR/USD: Evening Star Receives Confirmation
Weekly Chart - Created Using FXCM Marketscope 2.0
By David de Ferranti, Market Analyst, FXCM
Follow David on Twitter: @Davidde
To receive David’s analysis directly via email, please sign up here.