EUR/USD weakens from Fibonacci resistance
EUR/USD has once more come into a deep retracement, with yesterday’s relatively hawkish European Central Bank meeting providing a significant bounce for the pair. This saw price break through the 76.4% retracement ($1.1309) before weakening late into the session. We have a potential head and shoulders pattern with a slanted neckline coming in play here. Thus should price reverse lower and post an hourly close below the ascending trendline, a bearish outlook comes into play.
However, the key would be an hourly close below $1.1241 to provide us with a bearish outlook. Given that we have seen higher highs and higher lows over the past week, there is clearly a possibility the pair could continue this short-term uptrend to break through yesterday’s high of $1.1327.
However, given the similarity of yesterday’s long wicked top to the previous swing high reversals, it makes more sense to play a potential reversal (below $1.1241) or await a break above $1.1341.