EUR/USD has finally turned to the downside and it seems very heavy in the short term. USDX rebound pushes the pair lower, so further growth registered by the US dollar Index will send EUR/USD towards the 1.19 psychological level.
Surprisingly, the price has dropped even though the NFP was reported at -140K jobs versus 60K expected. It seems that EUR/USD was too overbought to continue trading north, so the corrective phase is natural. The pair has shown signs of exhaustion over the past weeks, but it was too early to go short before getting confirmation that we will have a corrective phase.
USDX Drives EUR/USD Lower
EUR/USD is trading below the median line (ml) of the ascending pitchfork and above the S1 (1.2157). Stabilizing below the median line and closing under the S1 signals further drop. Technically, the breakthrough of the 1.2214 level has activated a downside movement, that is, a corrective phase.
The price has escaped from the upward channel between the sliding parallel lines (sl and sl1) indicating a bearish reversal. MACD, RSI, and Stochastic have shown a bearish divergence on the H4 chart lately, so the current drop was expected.
Trading Tips
Sell after the retest of the 1.2200 psychological level and false upside breakout and use the 1.21 level as the first downside target. We may also have a short signal if the price tests and retests the broken median line (ml).
A bearish closure under the S1 (1.2157) could represent a selling signal as well. The lower median line (lml) and the S3 (1.2001) could be used as targets as well.
