EURUSD H4 – Bears on the move
PRESS RELEASE – Written on 04/05/2021 by Theunis Kruger, FX Trainer at FXTM
The EURUSD currency pair on the H4 time frame was in an uptrend until the 29th of April when a higher top was recorded at 1.21492. Bears found the price attractive at that level and supply overwhelmed demand.
A closer look revealed that the Momentum Oscillator displayed negative divergence between point A and B, compared to the price at 1.21160 and 1.21492. This could have alerted technical traders that a potential technical reversal was in the making.
After the top at 1.21492, the market broke through the 15 and 34 Simple Moving Average and the Momentum Oscillator broke through the zero baseline into negative territory. The above indicators, as well as a Three Black Crow Candlestick Pattern, further confirmed the possible price reversal or start of a new trend.
A possible critical support level formed when a bottom was recorded on the 3rd of May at 1.20119. Bulls tried to push the market higher, but the Euro found resistance on the same day at 1.20750 and Bears then began to attack in earnest. The new bearish momentum was confirmed with another Three Black Crow Candlestick Pattern.
On the 4th of May the Euro broke through the critical support level at 1.20119 with a short position ensuing. Three possible price targets were projected from there. Attaching the Fibonacci tool to the bottom at 1.20119 and dragging it to the top of the last pullback at 1.20750, the following targets were calculated. The first target was estimated at 1.19729 (161.8%). The second price target was forecast at 1.19098 (261.8%) and the third and final target might be anticipated at 1.18077 (423.6%).
If the resistance level at 1.20750 is broken, the above positions must be liquidated to protect trading capital.
As long as bears continues to march on and supply overcomes demand, the outlook for the Euro on the H4 time frame will remain bearish.
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