The pair moved all the way down from 1.3410, 20 pips below the 2/20 high of 1.3430. Before that big move, we had several warning signs: the candlesticks of June 10, June 11, and June 12 together formed an “advance block” pattern, in which the three candlesticks had progressively smaller real bodies, indicating a weakening upside drive; potential “hanging man” patterns on June 13 and 14. Another interesting warning sign actually came from GBP/USD: on June 17 and 18 this high beta pair formed a doji followed by a relatively strong bearish candlestick, whereas the EUR/USD was still trading in a tight range before the June 19 FOMC announcement.
The recent steep downside move of EUR/USD continues and the pair is now approaching its major support level at 1.3000. The price may have a pause at this level and any pullback may be limited. If the price breaks below 1.3000 in a meaningful way, then the next support levels are located at 1.2950 and 1.2830/00. The RSI on the daily chart broke down below the resistance/support line and is now below 50. The MACD crossed below the signal line but is still above zero.
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