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On Thursday, EURO initially reclaimed 1.30 against USD but failed to hold the 1.30 level to finally settle near 1.2940 representing 61.8% Fibonacci Retracement Level support of its move from 1.3486 to 1.2064.
On Friday, the pair continues trading near the 61.8% retracement level and is currently quoting at 1.2935.
As was already mentioned in previous report, the pair seems to have formed a Double-Top chart pattern, typically a bearish pattern, on daily charts near 1.3120 – 1.3140 zone signaling that the up-trend might be weakening.
Also, a Rising Wedge formation, a bearish pattern, is visible on daily chart with the lower trend-line support near 1.29 zone also coinciding with 23.6% retracement level of its 1.2042 - 1.3172 rally and 50-day SMA support.
Hence, 1.2905 – 1.2895 zone on the downside is likely to provide immediate support for the currency pair.
Should the pair slip below 1.29 support zone, the downward momentum for the currency pair seems to get accelerated towards 1.2840 – 1.2830 important support zone.
Moreover, should the pair decisively breach the 1.2830 – 1.2840 support zone, the Double Top formation would be completed and the pair seems to immediately test 1.2740 – 1.2760 support zone in the near-term.
Furthermore, once the Double Top formation is confirmed, short-term trend for the currency pair may turn bearish and the pair could even test 1.26 level on the downside.
However, any up-move beyond 1.3030 – 1.3040 zone may negate the short-term bearish outlook for the currency pair.
On the upside, immediate resistance for the pair is pegged at 1.2950 – 1.2960 zone followed by a strong resistance at the descending trend-line, visible on daily chart, near 1.3030 – 1.3040 zone.
Haresh Menghani
Market Analyst
Admiral Markets
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