EUR/USD Showing Bearish Divergence On H1, H4 And D1 Timeframes!

Yesterday after the FED announcement, EUR/USD pair has developed very clear Regular Bearish Divergence Patterns on the H1, H4 and D1 timeframes. What this means is that the uptrend which had started last week could not be sustained in light of the FED announcement and this pair has turned bearish. The initial reaction on the FOMC Meeting outcome has been somewhat optimistic but this bullish mood was very short. Once the market absorbed the impact of the announcement the pair has turned bearish with the appearance of strong bearish divergence patterns on the H1, H4 and D1 timeframes. If you take a look at the EUR/USD H1 picture below you will find strong regular divergence patterns appearing on this timeframe.

EUR/USD H1 Timeframe 21st June 2012

MACD is showing Regular Bearish Divergence, Stochastic is showing Regular Bearish Divergence as well as the RSI oscillator.Now take a look at the EUR/USD H4 chart on 21stJune 2012. You will once again find MACD, Stochastic and RSI showing Regular Bearish Divergence.

EUR/USD H4 Timeframe 21st June 2012

It is always a good idea to take a look at the daily chart as well. EUR/USD Daily Chart on 21st June 2012 is also showing Regular Bearish Divergence on RSI oscillator meaning a downtrend has also started on the D1 timeframe.

EUR/USD D1 Timeframe 21st June 2012

It seems that the FED announcement that was made yesterday played a major role in starting this downtrend. The daily candle that was formed on 2oth June 2012 was a Doji pattern with almost equal wicks meaning the market will in a state of complete indecision as to in which direction it will move. This downtrend will continue till the appearance of the Bullish Divergence Pattern on the D1 timeframe. As a technical trader, we would suggest you should wait for the appearance of the Regular Bullish Divergence Patterns to appear on the H4 and the D1 timeframe till then take EUR/USD as bearish. The downtrend can continue for some days. Appearance of the bullish divergence pattern on H1 timeframe can mean retracement if it is not supported by a bullish divergence pattern on H4 and D1 timeframes.

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