EUR/USD Rangebound After Forming a Double Top
2023.12.21 07:21
- EURUSD gets rejected a tad below its recent 4-month peak
- A failure to claim that level could validate a double top structure
- Momentum indicators lose steam but remain positive
EURUSD experienced a solid correction from its recent four-month high of 1.1016, but the pair managed to erase most of it, following a decisive break above the 200-day simple moving average (SMA). However, the rebound faltered just shy of the latest peak, underscoring the case of a double top structure.
Considering that both the RSI and stochastics are showing signs of fading positive momentum, the price could reverse lower towards the recent support of 1.0964. Sliding below that zone, the pair may challenge the November support of 1.0827, which lies very close to the 200-day SMA. Further retreats could then stall at the December low of 1.0765.
On the flipside, should the pair advance higher, the first crucial target could be the four-month peak of 1.1016. Conquering this barricade, the bulls might attack the April-May resistance of 1.1094. A violation of that region could open the door for the 2023 high of 1.1275, which is also the highest level in 19 months.
In brief, EURUSD’s initial failure to post a fresh higher high after touching its previous four-month peak is increasing the odds of a double top pattern. Should that scenario materialize, it could be the beginning of a steep pullback.
