I've been looking at the EUR/USD pair in recent days and after having yet another poor day on Friday, there are several negative signs starting to appear for this particular currency pair. In fact there are three reasons in particular why I think this pair could fall quite considerably in the coming weeks:

1. Price Fallen Through Support Level On Daily Chart

If you plot a daily candlestick chart, you will see that the EUR/USD has been trading sideways for several weeks now. You should also see that after closing the week at 1.2907, the price has broken down through the recent support level, ie the low point of 1.2969, so it now looks set to continue moving downwards.

2. Breakout Alert According To Moving Averages

I have mentioned before on this blog why you should pay close attention when multiple moving averages are all trading close together. This generally tells you that a big breakout is on it's way.

In the case of the EUR/USD pair, you can see that this is certainly the case at the moment. On the daily chart we have the 5, 20, 50 and 200 period EMAs (exponential moving averages) all trading very close together, and the short term ones, ie the 5 and the 20, have both started moving downwards in line with the price breakout mentioned previously, which is an ominous sign.

(Edit: I've just noticed that this is the case on the weekly chart as well).

3. New Downward Trend Signalled On The Weekly Chart

Finally if you switch your attention to the weekly chart and look at the longer term picture, you can see that after last week's close, the latest weekly candle has closed below the Supertrend indicator. This means that the trend has turned from bullish to bearish, and could well lead to some major downwards price movement, as is so often the case when this weekly trend changes.

Of course, as I always say, even after pointing out these three reasons why I think the EUR/USD is set to fall a lot further, there are still no guarantees in this game. All you can do is try and put the odds in your favour, and I think these particular arguments definitely suggest that the price is far more likely to fall than rise.

It may not do so in the immediate future, because we may see a brief bounce-back after last week's downward price movement, but in the next few weeks I think the EUR/USD could well continue falling quite substantially below it's current level of 1.2907. We will have to wait and see.