EURUSD (1H) - Bearish Reversal with Double Top

EURUSD

📶Technical Analysis:

🟠 From January 13th to January 29th, the market was in a strong bullish trend, with prices steadily moving higher. The trend was supported by consistent higher highs and higher lows.
🟢 Between January 24th and January 28th, a Double Top pattern formed. This is a classic bearish reversal formation that occurs when the price fails to break above a key resistance level, marking two distinct peaks (tops) at roughly the same price level. The failure to surpass the previous high indicates that the buyers are losing momentum and that the market could be turning bearish.
🟢 On January 29th, the trend line was decisively broken, confirming the shift in market sentiment from bullish to bearish. This breakdown is a crucial event, as it suggests that the upward price movement is no longer sustainable, and the market is now in the process of establishing a downward trend.
🟢 Following the break of the trend line, the price started to form lower highs and lower lows, indicating that sellers have gained control of the market. This pattern is typical in a bearish trend, as it shows diminishing buying pressure and an increasing presence of sellers.
🟢 The bearish crossover of the moving averages further solidifies the reversal. Short-term moving averages crossing below longer-term moving averages indicate that the bearish momentum is accelerating. This is often interpreted as a signal to sell or go short, as the market is now in a confirmed downtrend.
🟡 Key support levels along the new trend line will be crucial to monitor. If the price breaks through any of these support levels, the bearish trend is likely to accelerate, leading to further downside potential.

🆕 Fundamental Analysis:

🟢 The US Dollar (USD) continues to strengthen, as the US Dollar Index (DXY) reached a weekly high of 108.35, driven by strong demand for the Greenback as a safe haven.
🟡 President Donald Trump threatened to impose 100% tariffs on BRICS nations and 25% tariffs on Mexico and Canada if they challenge the US Dollar's dominance or attempt to create an alternative currency. This statement could further increase market volatility and impact global trade relations.
🟡 The Fed held interest rates steady on Wednesday and indicated that it will remain in a wait-and-see mode until there’s substantial progress on inflation or weakness in the labor market. This signals a cautious approach in monetary policy.
🟢 The Euro (EUR) continues to weaken amid expectations of easing monetary policy from the European Central Bank (ECB). German CPI data shows inflationary pressures are easing, boosting hopes that the ECB may lower rates in the future.

🔤 Summary:

🟢 The EUR/USD pair remains under pressure due to a combination of factors, including weaker German inflation data and strong US Dollar performance. The pair is expected to maintain a bearish trend, with the focus on potential short positions around the newly formed trend line or key levels of resistance.
🟢 Watch for the trend line or significant resistance zones, as they may offer entry points for short positions if the pair continues to respect the downward trend.
🔴 If the price breaks above the trend line or key resistance, the current bearish analysis will no longer hold. In this case, it would be prudent to wait for further indicators and clear price action formations before taking new positions.