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Fan Yang

EUR/USD Testing Key Pivot After Falling from H&S Pattern

At the start of this week, we observed a completed head and shoulders pattern in EUR/USD. We anticipated a dip and noted some key levels. 

EUR/USD Daily Chart

(click to enlarge)

Bearish Breakout:
- The daily chart shows that price broke below the head and shoulders pattern and a rising trendline at the same time .
- This reflects a bearish correction developing.
Key Juncture:
- On the daily chart, note that price is testing a previous support area from August. 
- Also the daily RSI is right around 40. 
- These are two support factors so this is the first challenge to the bearish correction.
- A bullish market would likely bounce up here and continue the trend.
- However, we know that Janet Yellens hawkish tone can provide strength for the dollar until close enough to the Oct 31-Nov 1 FOMC meeting. 
Next Support:
- The weekly chart shows the bearish correction now testing a previous resistance pivot and the 100-week simple moving average (SMA). 
- We noted that this might not hold up. 
- Then, we should probably look around the 1.14 to 1.15 area for support, especially if the daily RSI is in oversold territory (below 30).

EUR/USD Weekly Chart

(click to enlarge)

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