EUR/USD Technicals – Triple Top Formed, Awaiting Confirmation

And the slide continues.

Prices have been bearish since 2014 and we’ve not seen any significant bullish response seen. The latest bout of bearishness occurred during US session on Friday which broke the previous consolidation zone and sent prices below 1.36. Despite a slight bullish pullback during the final hour of trade, prices remained below 1.36.

Hourly Chart

This morning’s trade saw slight continuation of Friday’s pullback  but 1.36 held firm. There were a couple more attempts in the few hours that followed but 1.36 remained stubborn, allowing bearish pressure to build up as the descending channel will be actively in play even if prices remain flat for the next few hours. However, we may not need to wait for a few more hours for the next bearish leg with prices already fallen below last Friday’s low earlier on. Hence, do not be surprised if we see prices pushing lower from here especially since broad Asian market right now is heavily risk-averse with China HSBC/market Service PMI coming in weaker than previous month. Given current bearish sentiment, bears may latch onto any excuse they can find to sell into.

Stochastic indicator dampens bearish cheers though, with readings currently within the Oversold region. Also, considering that trading volume remains low, there is a chance that current bearishness may not reflect the rest of the market. Therefore, even though S/T trend is bearish, traders may still wish to limit their risk (e.g. tighter stop losses) in light of potential sudden bullish spikes.

Daily Chart

Daily Chart remains bearish though, and a Triple Top has been formed which opens up a long-term move towards 1.31. With such a potential runway for bears, traders can afford to waste a little bit of tarmac in order to ensure that this bearish flight is actually taking off before committing. This can be in the form of waiting for confirmation of the 1.363 break. Stochastic readings are currently nearing the oversold region, and a potential bullish reversal towards 1.363 cannot be ruled out – in line with Short-Term analysis which keeps the possibility of bullish pullback open. Should a S/T pullback does take place but price remain below 1.363, a push towards interim support of 1.344 – 1.345 becomes more assured.

Fundamentals support a long-term bearish push as well, with USD expected to strengthen on QE Tapers and EUR weakening when financial problems from EU periphery emerge once again. There is also the problem of continued unemployment in EU, and ECB’s Draghi may well be forced to implement negative deposit rates eventually to spur spending.

More Links:
Gold Technicals – Trading Within S/T Bullish Channel
GBP/USD – Pound Drops to Start 2014
USD/JPY – Yen Fights Back As US Unemployment Claims Misses Estimate

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.