On the daily chart below for EURUSD, we can see that the market has finally turned around and the trend has now changed. The multiple failures to break above the 1.1033 high were significant and once the price fell below the red long period moving average, the sellers started to pile in aggressively, eventually pushing the price much lower.
The moving averages have now crossed to the downside in a further confirmation that we are in a downtrend. We could also have a major double top pattern with the neckline at 1.0533. The first support for the buyers should be at the 1.0750 level, where we may see the first deeper pullback after such a quick selloff.
EURUSD technical analysis
On the 4 hour chart below, we can see that the market was trading within a rising channel diverging with the MACD. This is generally a sign of weakening momentum and it’s often followed by pullbacks or reversals. The divergent rally into the 1.1033 high was in fact meaningful as the rally stalled there and started to range until we eventually got a breakdown. The moving averages are acting as resistance for the current downtrend and the sellers should keep on leaning on them until the 1.0750 support.
On the 1 hour chart below, we can see that the price has recently pulled back into the 1.0845 resistance before falling again towards the 1.0810 low. The sellers should pile in more heavily once the price breaks below the low, targeting the 1.0750 support. It’s worth noticing that the price has started to diverge with the MACD, and we are getting closer to the key support.
This may be a sign that we are about to see a deeper pullback to the upside before the next selloff. The buyers, on the other hand, should be waiting at that 1.0750 support to target a rally towards the 1.09 handle or wait for the price to break above the trendline before piling in.
