EUR/USD Dojis Denote Deliberation Amongst The Bulls Near 1.3800
- EUR/USD Technical Strategy: Pending Short
- Recovery may be limited with bullish reversal signal missing
- Evening Starformation on the weekly offers ominous warning
EUR/USD’s recent bull-run has been capped at the critical 1.3800 handle for the time-being. While the pair has staged a remarkable recovery over the past two trading sessions, traders should be wary of the potential for the rally to stall, given that prices remain in a short-term downtrend on the daily, and a bullish signal is notably lacking.
EUR/USD: Bounce May Be Limited With Downtrend Intact
Daily Chart - Created Using FXCM Marketscope 2.0
As noted in yesterday’s candlesticks report, the bulls’ run was likely to be met by selling pressure around the 1.3800 handle. With several Long-Legged Dojis having formed near the critical resistance level, the potential for an upside breakout is put in doubt. However, we’re yet to see a bearish reversal signal emerge, this leaves the pair at a critical juncture in the session ahead.
EUR/USD: Sellers Keep Gains Capped At 1.3800/5
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
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.