Cabana Capitals Blog Market Insights EUR/USD: Pair is turning down with double top pattern

EUR/USD: Pair is turning down with double top pattern

Overview:-  By looking at the daily chart we can see that pair is falling down and heading south side with double top pattern. Well bears are falling down aggressively and trying to approach the 1.0900 level. The way bears are getting supply pressure from the 200 SMA line it seems like it is perfect selling opportunity and we will keep our view bearish on the pair as long as 1.1100 and 1.1180 level remains intact.

In the last month bulls were rocking and seem in a party mood as we can see that in the last month the whole credit goes to bulls and initially bulls breached the downtrend channel and then it marked a high of 1.1180 level where 1.1100 was a psychological level and bulls able to break this level, but now picture has been changed and depicts that again bears have taken the charge and dominating the bulls at every level.

Technical prospective:- From technical prospective we can see that pair has started to get reverse from the exact 61.8% Fibonacci retracement line. The Fibonacci retracement was applied from 1.1406 to 1.0878 i.e. extreme peak and trough from intermediate point of view. One more thing we can see that pair has received reversal signal at 200 SMA line which indicates that we may see further reversal signal.

It is just a starting of bears so we will get further bearish confirmation below the 1.1000 level. Overall pair is trading and sustaining between the moving average lines which is providing downside signal. A bearish crossover on MACD indicator is a recent development and RSI started to decline below 50 with a small divergence.  Odds are in favor of bears and our bias remains bearish on the pair as long as 1.1100 level remains intact.

What next:-  A daily closing below 1.1000 level will open the way towards the 1.0950 and furthermore in coming trading sessions and convert every bounce as selling opportunity. The pair could face the next support at 1.0950 ahead of 1.0900. On the upside, resistances align at 1.1100 and 1.1180.

Trade idea:-  Based on chart and studies above we can suggest that sell the pair at CMP 1.1028 for the target of 1.0950 and 1.0900 with the tight stop loss of 1.1100.



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