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EUR/USD strength proves short-lived, with bearish engulfing pattern in play
Yesterday saw a bounce from the 50% retracement and an attempt to create a new high. However, this has proven to be short-lived, and this morning’s four-hour candle has just formed a bearish engulfing pattern. This, coming after a failed attempt to break to a new high, is a worry for EUR/USD bulls and especially so if the pair moves below yesterday’s low of $1.102.
Given the inability to create a new high, coupled with the bearish engulfing pattern, I am bearish for a move back towards $1.1027. Below that, the 61.8% retracement is also of interest as support, given the previous legs of this move higher.
There are signs that the dollar is going to come back to strength, so this could mark the beginning of a period of weakness in EUR/USD. However, a move below $1.102 would give me more confidence that we are seeing this reversal.