Technical analysis of the currency pair EUR/USD on 20/10/2016. The daily chart
General analysis.
After breaking through the support level at 1.1140 the European currency began to significantly decline against the US dollar and the entire past week was held under the guidance of the "bears". The price has been tested the level of 1.0900 and right now the price is 1.0965.
Yesterday's daily candle closed as a "doji" with a huge bottom shadow and such formation with a rapid and dropping market tells us that it is possible that the bottom was found and price can fix here for a while.
Past similar decline for EUR / USD was recorded in July 2016 after the news about Brexit. At that time, the price had also tested the level of 1.0900 and then we went into a prolonged correction.
It is recommended to close all previously opened short positions at this stage because in the near future most likely we will see a pullback on the EUR / USD.
Next few days
Nevertheless we cannot completely abolish the scenario of further reduce and probably the level 1.0900 will be broken soon. In such case our next target will be the level of 1.0820.
We recommend to wait for the resolution of the situation with the breaking of the level and with penetration of support level 1.0900 open short with target point at 1.0830 and 1.0820.
