As mentioned yesterday (EURUSD – Greek Deal Prompts Bearish Move), the euro appears to have moved back into a bearish phase against the dollar, with the Greek “deal” potentially removing one risk event and bringing attention back to the Fed rate hike.
Yesterday we got our close below Friday’s opening level which is suggested yesterday would make the move even more bearish than it already appeared. This may have been added to again today, with the pair having rallied earlier but failed to break back above the prior trend line support. This acts as confirmation of the initial break.
The pair has since retreated quite aggressively and the result on the 4-hour chart is a bearish engulfing pattern, assuming the current candle closes below the opening level of the previous. What makes this more bearish is the fact that the current candle failed to break above the high of the previous – which itself came within 6 pips of the 50 fib level – 10 July highs to today’s lows.
All of these factors combined suggest the pair is looking much more bearish right now. The next key support level for the pair could come around 1.0916 – 7 July lows, followed by 1.0819 – 27 May lows.