FX.co ★ The EUR/USD candlestick analysis for 27/10/2010

The EUR/USD currency pair declines form the mark of 1.4079. If the falling continues then after the break through of the support level of 1.3696 the downside movement with the target at 1.3382 is expected.
Earlier on a 4-hour chart, the EUR/USD had formed Shooting Star candlestick that indicates the bearish sentiment.
This candlestick developed on the uptrend. However, the bears started increasing their influence and a rollback took place near January 2010 high.
A breakout of Fibonacci correctional level 23.6 and support level of 1.3777 denotes that the uprising trend is breached and confirms this point of view.
The fact that the EUR/USD formed the combination of candlesticks Dark Cloud Cover on a daily chart comes in favor of downwards movement.
Moreover, a pattern “Head-And-Shoulders” is forming on 4-hour graph. The breakthrough of the “neckline” will confirm this fact.
In case the resistance level of 1.4079 is breached, the short positions should be cut, since it will lead to increase to 1.4157.