EURUSD – Shooting Star May Signal Further Losses

After consolidating between 1.10 and 1.11 for a couple of days earlier this week, following the initial sell-off on the back of the ECBs easing warning, the euro tumbled against the dollar again on Wednesday as the Federal Reserve delivered a more hawkish than expected statement.

EURUSD Daily

Having fallen back to 1.09 yesterday, the pair ran into support from the ascending trend line – 13 March lows – and has since stabilised again. However, following a brief period of consolidation and some GDP data that was roughly in line with expectations, the pair may be about to fall again.

The last completed candle on the 4-hour chart is a shooting star which is typically quite bearish. However, the pair has been rallying since this candle formed which could tell us just how bearish it is.

EURUSD 1hr

If the pair rallies and takes out the high of the shooting star, it would suggest to me that the market is not currently as bearish as the candle would suggest. At this point I will continue to look for signs that the pair is about the reverse back to the downside.

If on the other hand the pair fails at or just below the high, it would suggest we could see another move lower. A move below the current candle low would then further support this.

If we see this then we could see a challenge of yesterday’s lows, a break of which could prompt a move back towards the May and July lows around 1.08, where the pair could find strong support.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the BBC and The Telegraph, and he also appears regularly as a guest commentator on Bloomberg TV, CNBC, FOX Business and BNN. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.