Our suspicion not to chase EURUSD higher last week was proven correct. EURUSD closed lower and formed a weekly bearish candlestick pattern. While this doesn’t mean that the price will immediately plunge lower, it does increase the chances that EURUSD has seen the highs for the cycle around 1.2266.

That said, we will look at the daily chart in this article for more details on the near-term outlook. For example, here we can see that EURUSD broke the rising trendline that propelled the bullish trend in April in May. This signaled the end of the bullish leg and could be an early sign that the trend may be over altogether.

While the April/May bull leg may be done, it doesn’t mean that EURUSD can’t have another go higher and perhaps retest the 1.2266 May highs or even the 1.2350 January highs. In fact, if it does that in the following days, it still wouldn’t cross above the broken trendline, which would act as a resistance trendline in this case (based on the support turning into resistance principle).

On the downside, 1.2150 is evolving into a key support zone. If the price breaks below, it’s likely to gather momentum and relatively quickly reach 1.20, which is the next critical support zone lower.