EUR/USD: double top formation to signal rapid declines?
Last week was a strong one for EUR/USD, with the pair reaching as high as 1.34 before the dollar started to gain strength again. As traders are re-positioning with regard to the Fed’s potential tapering, the EUR/USD formed a double top formation on the daily chart, right above the 61.8% Fibonacci retracement level, from January’s high to July’s lows.
A consistent break below 1.322, the 50% Fibonacci level, would provide solid confirmation of the bearish bias. Once this key support level is broken, we expect rapid declines with the next support level sitting at 1.297. In the alternative scenario, we would have to see a break above the double top at 1.34 in order to reconsider our outlook.
Published: 15 August 2013
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