EURUSD - Sellers Finally Surface, Weekly Reversal Shifts Focus Lower
Last week, EURUSD started out on a strong note by briefly pushing through the 2010 low at 11876 on two different days, but each day it was unable to sustain above. Leading into the U.S. jobs report on Friday the euro was putting in a rising wedge on the 4-hr timeframe which provided a warning that we could soon see a downdraft if the underside of the pattern was broken. The all-around solid jobs report gave the US dollar a shot in the arm across the board. Not only was the bearish rising wedge triggered, but for the first time since June we saw a lower-low develop on the 4-hr. This puts us on alert for a bearish sequence to begin developing marked by a failure to rally and develop a lower high and then subsequent lower lows. The first area to look for the euro to struggle is roughly where it closed the week near the vicinity of 11775/800, and even if it can rise above this first level of resistance if the trend is to turn lower it shouldn’t be able to gain traction above 11850.
Pulling back to the weekly chart, a key reversal bar was carved out giving indication that last week could have been a week of exhaustion in the trend. It may not turn out to be ‘the’ top in the euro, but a correction or sideways consolidation looks like the best-case scenario for the foreseeable future. It would require a strong push back above last week’s high over 11900 to possibly re-ignite a bullish outlook.
In total, the combination of a major weekly reversal bar and break in a trend which has been extremely persistent for so long suggests the path of least resistance moving forward will be lower. On the way down in terms of support there is the 8/2015 high at 11714, 11650, and 11612, followed by the trend-line extending higher from the April swing-low.