EUR/USD, GBP/USD and AUD/USD start to reverse lower
EUR/USD, GBP/USD and AUD/USD start to reverse lower, with haven demand helping to drive the dollar higher.
EUR/USD showing signs of a bearish reversal
EUR/USD provided us with a bearish reversal signal yesterday, with the breakdown below $1.0953 bringing the recent uptrend to an end. That break highlighted that the subsequent rally was a likely retracement and precursor to the bears coming back into play. That appears to be happening following a mere 50% retracement.
While the lack of depth to that retracement does raise questions over whether we could see another leg higher to move towards the 61.8%-76.4% Fibonacci zone, the sharp decline we are currently seeing does highlight a strong bearish conviction. As such, irrespective of whether we see that ABC retracement come into play, a bearish outlook is in play unless we see the $1.1147 level broken. Confirmation of this bearish reversal comes with a break below the $1.0927 low.
GBP/USD declines raise prospect of double top formation
GBP/USD has been losing ground overnight, following on from a rally that failed to regain the $1.2485 peak seen on Friday. That inability to maintain higher highs does raise the possibility of a bearish reversal, with a double top formation completed if the price breaks below the $1.2244 swing low.
That certainly hasn’t happened as things stand, and thus we are currently in limbo where a break through $1.2485 (bullish) or $1.2244 (bearish) would provide a more confidence outlook for the pair as we move through the week.
AUD/USD starts to roll over after recent ascent
AUD/USD has also started to look rather toppy, following on from a week of gains that managed to regain over half the losses seen at the beginning of March. However, that bearish trend looks like it could come back into play here, with the pair failing to create a new high, and subsequently breaking below the $0.6067 support level.
Confirmation of this bearish reversal move comes with a break below the $0.6023 level, especially given the fact that the recent lows are perfectly on the 76.4% Fibonacci support level. As such, while it looks like we are seeing the beginning of a bearish reversal, watch for a break below the $0.6023 level to confirm this shift in market sentiment.
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