It’s been a few weeks since EUR/USD broke below the neckline of its and the response since has been a little sluggish, to say the least.
The trend was starting to look very favourable for the dollar as it enjoyed a bit of a resurgence, taking out the neckline of apattern in the process.
Since then, it came back and tested a cluster of moving averages – 55/89band on the and 200/233 band on the 4-hour chart – as well as key fib levels. This wasn’t a big concern, retracements are normal and they are standard rotation points after a breakout.
Since then, we’ve seen further resistance to the breakout and the 200/233 band on the 4-hour chart has fallen. This isn’t a gamechanger, but I would say it’s a red flag. The key fib zones remain in place and the 55/89 dailycontinues to hold.
As long as this is the case, thebreakout remains valid. The concern is that an has now formed on the 4-hour chart in the midst of all the .
The neckline of this isn’t as clear as the one on thebut what is clear is that a break above 1.22 doesn’t bode well for the initial formation on the . And in fact, it could be quite a signal for the pair.
At the moment, it’s still in tact and during his first testimony in the Senate, Powell hasn’t changed that. But we’re now at a critical level and things could become a lot clearer very soon.
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