Wednesday’s Technical Analysis: EUR/USD

This rare 3-candle pattern shows a shift from selling to buying pressure and often marks the setting a near-term market bottom.

However, the pair remains within its near-term Bearish channel, and the MACD is still indicating Bearish momentum by trending lower below both its Signal Line and the “O” level, so it is unlikely that the pair has formed a major bottom.

The oversold reading in the Slow Stochastics suggests that Bearish sentiment had reached a near term extreme, and that the recent downtrend could resume in here.

For now, traders will look at the top of the Bearish channel and the 50-Day MA around 1.1100 as Key Resistance and may look to re-establish short trades if and when that mark is reached.

A clear break below prior Support in the 1.0800-20 area could open the door for another leg South to 1.0700 or even the 12-yr low near 1.0500.

* A Morning Star candle formation is rare candlestick formation created by a long Bearish candle, followed a small-bodied candle near the low of the 1st candle, and completed by a long-bodied Bullish candle. It represents a transition from selling to buying pressure and forecasts strength ahead.