In our last analysis on EURUSD yesterday we warned traders that a short-term top was imminent and a reversal could come very soon. Price was making higher highs but the RSI was giving bearish divergence signals. At the same time price was approaching major trend line resistance. Exiting the bullish channel would confirm that top and the reversal.
Purple line -bearish divergence
Green lines – bullish channel
Red line -resistance
The move from 1.17 to 1.2150 is over. Whether it was a counter trend bounce or the start of a new upward move we will found out soon. Now price is pulling back after the rejection at the red trend line resistance. The bullish channel has been broken and the bearish divergence signals have now been confirmed. Support is found at 1.1977 and 1.1870 levels. Breaking below 1.1870 will increase the chances that the entire upward move was just a counter trend bounce and a right hand shoulder to a bearish head and shoulders pattern. Of course the most important price level in this scenario remains at 1.17 where the recent low was and the neckline support. We are at least short-term bearish EURUSD expecting a move lower.
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