If EURUSD wasn’t already looking bearish following yesterday’s late pullback, it’s certainly starting to now following the dollar surge on the back of the strong US jobs report for May.
Yesterday’s reversal in the second half of the session left the pair looking rather bearish. A failure to break through the 1.14-1.1535 resistance area, or even properly test it for that matter, was an early sign that the pair was not as bullish as it had looked in the couple of days prior.
This was a big region for the pair as there was a cluster of resistance levels providing a significant barrier and a break above these would have been an extremely bullish signal. Aside from containing a number of previous support and resistance levels, the descending trend line from 15 August highs and the 144-day simple moving average also came into play in this area.
Not only did the pair fail to break through here, the result was a bearish shooting star candle complete with a close below the opening level. The only thing that could make this better is a close below the middle of the body of Wednesday’s candle, thereby completing the evening star formation.
As it stands, not only do we have that, but thanks to the jobs report, price is currently below Wednesday’s opening level. As long as this can be maintained into the close, I will be very bearish once again.
In this case, the next major support would come around 1.0820, 28 May lows, a break of which would offer lower lows following yesterday’s lower highs, thereby confirming the new downtrend. Below here, 1.0650-1.07 would be key.
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