Talking Points

  • 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.

EUR/USD: Falters At 1.3800 As Bulls Lose Steam

Forex-Strategy-EURUSD-Stalls-At-1.3800-As-Bearish-Signal-Forms_body_Picture_3.png, Forex Strategy: EUR/USD Stalls At 1.3800 As Bearish Signal Forms

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.

EUR/USD: 1.3800/5 In Focus During Intraday Trade

Forex-Strategy-EURUSD-Stalls-At-1.3800-As-Bearish-Signal-Forms_body_Picture_2.png, Forex Strategy: EUR/USD Stalls At 1.3800 As Bearish Signal Forms

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

Forex-Strategy-EURUSD-Stalls-At-1.3800-As-Bearish-Signal-Forms_body_Picture_1.png, Forex Strategy: EUR/USD Stalls At 1.3800 As Bearish Signal Forms

Weekly Chart - Created Using FXCM Marketscope 2.0

By David de Ferranti, Market Analyst, FXCM

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