One day before the Federal Open Market Committee (FOMC), EUR/USD enters a full selling mode, making a strong bearish statement. The price successfully broke major supports and is free to reach new long-term lows.
It all started two weeks ago, when the EUR/USD broke major resistances, creating hope for buyers. As we later found out, that breakout was a false one (red), and at the beginning of the previous week, the EUR/USD came back below those resistances, crashing the whole bullish dream.
False breakouts are usually excellent signals to trade in the opposite direction. It’s no different in this case, either.
In addition, the price created a flag pattern (black), and today, we finally managed to break its lower line. That is the last piece of the puzzle. The price is below the down trendline (blue), back below the 1.138 resistance (yellow), and now, below the lower line of the flag. All is set for a further bearish slide.
“Buy the rumors, sell the facts”
This can be a factor that can derail the bearish plan, though. Currently, the USD is being bought in anticipation of the FOMC. Once the Federal Reserve (Fed) delivers what is generally expected, we may see the “sell the facts” part of this quote, which for EUR/USD, would mean an upswing.
As always, we’re about to find out what’s going to happen, but as for now, technically, sellers are in a much better position.
