EURUSD There have been three very bearish developments in EURUSD since Friday morning’s report.
First off, the 2-3 week uptrend channel that has been guiding us off the 1.4023 lows has now completely broken down which indicates the bulls have lost their dominance.
Secondly, there is a bearish engulfing candlestick on the daily chart which reaffirms that the bears have assumed control of the pair in the near-term.
Thirdly, there appears to be a head and shoulders pattern activated on the hourly chart with a neckline at 1.4377 and a target around 1.4235.
We have therefore gone short on the break below the neckline and expect very little support to stand in the way of reaching our target (only hurdle will be the 7 Apr low 1.4243).
For those that missed the initial move, we still feel there’s good value in selling rallies around 1.4350. Should the move overshoot our target then watch for pockets of demand at 1.4152 (5 Apr low), 1.4062 (1 Apr low), 1.4023 (28 Mar low), and 1.4000 psychological support. Resistance levels are now eyed at 1.4520 (the 12-13 Apr highs), 1.4580 (seen on 13 Jan 2010), 1.4686 (14 Dec 2009 high) and 1.4776 (11 Dec 2009 high).(www.ibtimes.com)