EURUSD: conditions ripe for formation of a double top

According to the results of the last week of winter, major currencies showed mixed dynamics. Falls against the US dollar were seen with the Australian dollar (-1.82%), the New Zealand dollar (-1.61%), the Canadian dollar (-1.26%) and the British pound (-1.09%). Increases was recorded by the Japanese yen (+3.20%), the euro (+1.64%) and the Swiss franc (+1.34%).

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On Friday, the EURUSD pair was up at the close of trading. At the European session, the price fell to the level of 1.0951 from which it rebounded to 1.1046. The euro recovered even amidst a falling dollar index. The fall provoked the release of a statement by the representative of the US Federal Reserve Bullard. He said that if the situation with coronavirus worsens into a global pandemic, then lowering the basic interest rate levels is one option.

Today’s news (GMT+3):

  • 11:30-12:30: Markit Manufacturing PMI (Feb) in Switzerland, France, Germany, the Eurozone, and the UK.
  • 12:30 UK: Net Lending to Individuals (MoM) (Jan), M4 Money Supply (MoM) (Jan), Mortgage Approvals (Jan).
  • 17:45 USA: Markit Manufacturing PMI (Feb).
  • 18:00 USA: ISM Manufacturing PMI (Feb), Construction Spending (MoM) (Jan).
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Current situation:

The expectations for Friday's fall came true – the price fell to the balance line (Lb). The rebound before the weekend was not even considered. At Asian trading, the price hit U3 for the third time. A serious sign ahead of a savage correction. In addition, Asian stock indices came out in the black. Take into account one working idea today: a rollback to the 45th degree, followed by an increase up to 1.1074 and a fall to 1.0996. A double top is expected. You need to pay attention at the EURGBP cross. If it crashes, it is unlikely that the main EURUSD pair will form a reversal pattern.

A channel has been formed at three extremes. At the current hour of 09:00 (Moscow time), the lower line of the channel passes through 1.0975. The balance line (Lb) is located at 1.0989. If bears get the rate down below the channel, then we should expect the pair to fall to 1.0914. Intermediate support will be found at the 1.0953-mark.

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