The EURUSD attempted to push lower this week, bottomed at 1.4156 but whipsawed to the upside, broke above 1.4518, topped at 1.4647 but closed lower at 1.4562. I believe as long as price able to stay above 1.4518, the major bullish scenario should remain strong at least testing 1.4700 – 1.4800. However, there are two technical factors which can be a threat to the current bullish outlook. First, the shooting star formation on daily chart after strong bullish move suggests potential bearish pullback even a bearish reversal. Usually a shooting star formation with bearish body gives better accuracy, but regardless of the type of the body, shooting star candle stick formation is a bearish warning. Secondly, the “head and shoulders” pattern which appeared on the hourly chart with neckline already broken to the downside. The 23.6% Fibonacci retracement of 1.4156 – 1.4647 around 1.4530 provided a good intraday support. A clear break below 1.4530 – 1.4518 could trigger further bearish pullback at least testing 1.4400 support area even lower as the shooting star bearish scenario could have further validation. Beside 1.4647 resistance area, we need to pay attention to the right shoulder of the H&S formation at 1.4587. A clear break above that area would cancel the H&S bearish scenario testing 1.4647 before testing 1.4700 – 1.4800.
Have a great weekend and see you guys next week.
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