EUR/USD Price Analysis: Slippage below 20-EMA post-Double Top formation favors bearish reversal
- Downbeat market sentiment has weakened the Euro bulls.
- A Double Top formation around 1.0500 has triggered a bearish reversal for the major currency pair.
- The (RSI) (14) has shifted into the 40.00-60.00 range, which signals a loss in the upside momentum.
The EUR/USD pair has dropped after facing barricades around the immediate hurdle of 1.0360 in the Asian session. Hawkish commentaries from Federal Reserve (Fed) policymakers joined China protests-inspired volatility and now have strengthened the risk aversion theme.
The US Dollar Index has found support around 106.40 and is looking to recapture an intraday high of around 106.75. Meanwhile, the 10-year US Treasury yields have recovered to near 3.70%.
On a four-hour scale, the asset has declined after forming a ‘Double Top’ chart pattern. The formation of the above-mentioned chart pattern indicates a bearish reversal as the asset tested previous highs on Monday around 1.0500 with weak buying interest.
The major currency pair has dropped below the 20-period Exponential Moving Average (EMA) at 1.0360 while the 50-EMA at 1.0277 is still advancing.
Meanwhile, the Relative Strength Index (RSI) (14) has shifted into the 40.00-60.00 range from the bullish range of 60.00-80.00, which signals a loss in the upside momentum.
Should the asset drops below Monday’s low at 1.0330, the US Dollar bulls will drag the pair towards the round-level support at 1.0330, followed by November 21 low at 1.0222.
On the contrary, a break above the psychological resistance of 1.0500 will drive the major currency pair to a fresh five-month high above 1.0536. A breach of the latter will drive the asset toward June 28 high of around 1.0600.
EUR/USD four-hour chart