Is the Trend Turning Bearish for EUR/USD After the Failure at 1.11?

EUR/USD has been bullish since October last year, when it bottomed below 0.95. Until February the pace was quite strong, but then we saw a retrace lower as the USD gained some strength on better economic data from the US. Although the banking crisis finally brought an end to the FED rate hikes which has been weighing on the USD.

Looking at the provided daily chart for EUR/USD, we can observe that buyers made several attempts to surpass the 1.1090 high, but their efforts were largely unsuccessful. Throughout this period, the 100 moving average (green) served as a support level during pullbacks above 1.05. However, recently, the price slipped below the 20 SMA (gray) which was acting as support lately, while the 50 SMA (yellow) was broken without much resistance from the buyers last week.

Additionally, there has been a prolonged divergence between the price and the MACD indicator, which suggests that the entire uptrend may have been built on weak foundations. This situation could potentially result in the formation of a significant double-top pattern, with the neckline situated at 1.0530. If a downtrend commences, this level would serve as the initial target for sellers.

Although, above that, we have the 100 SMA (green) which held the retreat in February and the stochastic indicator is already oversold now. This means that we may see some hurdles at the 100 SMA which comes at 1.08. If buyers hold the line, the price should head for 1.10 again, otherwise, the breakout to the downside would open the door for 1.05.

EUR/USD Live Chart

ABOUT THE AUTHOR See More

Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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