The strong selloff in EURUSD since the start of last week suggests that the long-term downtrend may be resuming after a sub-50% retracement in April and early May. Friday's big Bearish Engulfing Candle, along with the break back below key previous-resistance-turned-support at 1.1050, set the bearish tone heading into this week, and with rates peeking below the 61.8% Fibonacci retracement of the previous rally, more downside is possible this week. As for the secondary indicators, the MACD is about to cross below its '0' level, signaling a shift to outright bearish momentum, though the oversold Slow Stochastics hint at a pause or near-term bounce over the next few days.
Bringing all of the above together, it would not be surprising to see some near-term consolidation or a brief counter-trend rally in EURUSD this week, but as long as the pair remains below the 1.1000-50 zone and Greece's debt situation remains unresolved, traders will continue to sell first and ask questions later.
A Bearish Engulfing candle is formed when the candle breaks above the high of the previous time period before sellers step in and push rates down to close below the low of the previous time period. It indicates that the sellers have wrested control of the market from the buyers.
