Was it the charts or is it the news? What ever the underlying reason for yesterdays marubozu one thing thats clear is Euro’s upside is now likely capped. At a time when people keep speculating on when rate cuts will start what we know is the FOMC dynamics has shifted to a latter than sooner easing scenario. Inflation wise the Eurozone is also nearer its long term targets and likely in greater need of a looser policy environment.
Resistance
- 1.08891 – Gravestone Doji High
- 1.08404 – Intraday Consolidation Floor
- 1.08048 – Double Top Trigger
Support
- 1.07714 – 50D Moving Average
- 1.07229 – Intraday Consolidation Low
- 1.06751 – Daily Consolidation Low
EURUSD triggered a double top pattern with its sharp drop Wednesday following a daily Gravestone Doji. The move has taken us through the 20D Moving Average with the immediate objective of testing the 50D moving average. Indicators are also supportive of the breakout scenario with the 4H stochastic crawling in oversold areas and the daily poised to drop into oversold levels reflecting the potential start of a new down swing. For now an hourly bearish engulfing is key for us to chase the sell side of the market. We prefer holding off on taking the buy side unless efforts to extend the drop fails.
