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EUR/USD: A major bearish reversal day on Thursday has taken the pressure off of the topside for now with the market fast approaching next key short-term support by 1.3570. Look for a close below this level to further accelerate declines and open the door for deeper setbacks towards 1.3500. However, we do also see the potential for a bounce back towards the 1.3750-1.3800 area with the potential for a formation of an inter-day head & shoulders top. As such, the preferred strategy is to look to sell into rallies towards 1.3800, with stops to be placed just over the yearly high at 1.3860. Back above 1.3860 negates short-term bearish outlook and exposes 1.4000 further up.

Written by Joel Kruger, Technical Currency Strategist for DailyFX.com

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