EUR/USD Technical Analysis – Double Top Pattern & Bearish MoveThis EUR/USD 1-hour chart presents a clear Double Top pattern, signaling a potential trend reversal. The chart displays key technical elements, including support and resistance levels, trendlines, a stop-loss placement, and a take-profit target. Let’s go through an in-depth professional breakdown of this trading setup.
1. Market Structure and Trend Analysis
Before identifying the pattern, it’s crucial to analyze the market structure:
✔ The price had been in an uptrend initially, making higher highs and higher lows.
✔ However, the trend began to weaken after hitting resistance at the 1.0950 zone.
✔ This failure to break higher created a double top, which is a strong bearish reversal signal.
A double top forms when the price reaches a high twice, fails to break above resistance, and then declines past the neckline (support level), confirming trend reversal.
2. Double Top Pattern Breakdown
🔹 First Peak (Top 1):
The price surged upwards, hitting the resistance zone at 1.0950, but faced selling pressure.
The rejection resulted in a pullback to the neckline (support level at 1.0800-1.0820).
🔹 Second Peak (Top 2):
The price attempted another rally but failed at the same resistance zone, confirming seller dominance.
The second rejection suggests a lack of bullish strength, signaling a potential shift in momentum.
🔹 Neckline (Support Breakdown):
The key support zone around 1.0800 acted as a pivot level.
Once this level was breached, it confirmed bearish continuation.
3. Key Technical Levels & Price Action Signals
🟢 Resistance Level – 1.0950 Zone
This level has acted as a strong supply zone where sellers stepped in to push prices lower. The two failed breakout attempts indicate that buyers lost control.
🔵 Support Level (Neckline) – 1.0800-1.0820 Zone
Initially, this area provided buyer support, but once broken, it became a resistance level (previous support turns into new resistance).
⚡ Stop-Loss Placement – 1.09190
A well-placed stop-loss above the resistance zone protects against false breakouts.
If the price rises above this level, it invalidates the bearish structure.
🎯 Take-Profit Target – 1.06916
The projected target aligns with the measured move (the distance from the resistance to the neckline).
The price may find support at this level, where traders should look for a potential reversal or continuation.
4. Confirmation of Bearish Breakdown
For a high-confidence short trade, multiple confluences support the bearish bias:
✔ Break & Retest of the Neckline – After breaking support, the price attempted a retest and failed, confirming resistance.
✔ Trendline Break – The trendline supporting the previous uptrend has been decisively broken.
✔ Bearish Price Action – The formation of strong red candles and lower highs suggests sustained selling pressure.
✔ Momentum Shift – Increased bearish volume further confirms the reversal strength.
5. Trading Strategy & Execution Plan
✅ Entry Criteria
Sell after the retest rejection at the previous support (now resistance).
Look for a strong bearish candle formation as a confirmation signal.
📉 Risk Management
Stop-Loss: Placed slightly above 1.09190, ensuring the pattern remains valid.
Take-Profit: Target set at 1.06916, aligning with previous structure support.
💰 Risk-Reward Ratio
The setup offers an attractive risk-to-reward ratio, making it a high-probability trade.
6. Alternative Scenarios & Market Considerations
Although the bearish bias is dominant, traders should be prepared for alternative outcomes:
🔸 Fakeout Risk: If price closes above 1.09190, it could indicate a failed breakdown, invalidating the trade.
🔸 Bounce from 1.06916: If the price reaches the target support zone, buyers might step in, leading to a potential reversal.
🔸 Fundamental Influence: News events (such as FOMC, ECB statements, or US inflation data) can increase volatility and impact price direction.
7. Conclusion – A High-Probability Short Trade
This Double Top pattern setup presents a textbook bearish reversal, offering an excellent short-selling opportunity. The combination of technical confirmations, price action signals, and a well-structured risk-reward ratio makes this trade highly reliable.
Final Takeaways:
✔ Bearish Confirmation – Double Top breakdown with a retest rejection.
✔ Sell Setup Validity – Below 1.0800 support.
✔ Stop-Loss & Target Defined – Risk-controlled strategy execution.
📊 Verdict: Bearish trade setup with downside potential toward 1.06916. Traders should monitor price action for further confirmations! 🚀
