EURUSD Double Top Reversal Pattern

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EURUSD could be done with its climb as the pair is forming a double top pattern on the 4-hour chart. Price has yet to break below the neckline around 1.1700 to confirm that a selloff is due.

The 100 SMA is above the 200 SMA for now to suggest that the path of least resistance is to the upside or that support is more likely to hold than to break. The gap between the indicators is wide enough to show no imminent bearish crossover yet. However, EURUSD has already dipped below the 100 SMA dynamic inflection point as an early indicator of selling pressure.

A break below the neckline could set off a drop that’s at least the same height as the chart pattern or 200 pips. However, RSI is already pulling up after recently indicating oversold conditions or exhaustion among sellers, so buyers might be ready to take over.

Similarly stochastic is indicating oversold conditions, so bears could take a break. If so, EURUSD could bounce off support and make another top at the 1.1900 area.

There are no major reports due from the eurozone for the rest of the week, so any big moves could be a result of dollar action. US CPI and retail sales figures are up for release later in the week, which could mean more volatility for this pair then.

Headline CPI is slated to post a 0.3% uptick, slower than the earlier 0.6% gain, while the core version could see another 0.2% increase. Stronger than expected results could mean some support for the dollar, although traders might want to hold out for consumer spending data.

Headline retail sales could show a 1.9% gain, lower than the earlier 7.5% increase, while the core reading could see a 1.3% rise. Downbeat data, however, could mean dollar losses as it could prompt more Fed easing.

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