EURUSD has completed a head-and-shoulders top and has scope to move towards 1.0879 in the short-term, according to Tony Sycamore, Director of Australia-based TECHFX TRADERS.
After breaking and closing above the 200-day moving average at the end of 2019, Sycamore points out that EURUSD failed to close above channel resistance at around 1.1220/40. Since then it has closed below 1.1070/60 and completed a head-and-shoulders top, which opens the way for a test of the next downside target at 1.0980, with scope to move lower to 1.0879 (see Chart).
Moreover, Sycamore notes that the rally from last year’s 1.0879 Autumn low to the 1.1239 high unfolded in three waves akin to a corrective pattern in Elliott Wave theory, which adds fuel to his bearish outlook. He says a close above resistance at 1.1110/30 would be required to overcome this negative scenario.
Update 10 February 2020: Sycamore says a bearish bias remains in place – a break below 1.0880 would open up the channel support at around 1.0750. To negate the downside risks EURUSD would need to break back above the last swing high at 1.1095 and the 200-day moving average at 1.1120.