EURUSD has fallen below key support levels and is threatening to form an important top below 1.2205, says David Sneddon and his team at Credit Suisse in London.
Tuesday’s sharp fall saw EURUSD break through two important levels: i) Trend support from December at 1.2282 and ii) neckline support from a double top pattern at 1.2234 (see Chart). Sneddon says a closing break below the February low at 1.2205 would confirm the top, with support next seen at 1.2175/66 (from the rising 55-day moving average, mid-January low and 38.2% retracement of the November to February rally). After this level, he says more significant support can be found at 1.2092/82 – the uptrend from last April and 2017 high.
Sneddon thinks a top can be avoided, however, if EURUSD stays above 1.2205. Resistance is at 1.2255, then 1.2278, above which he thinks the immediate downside risk would ease.