Bearish flag breakdown in EURUSD

I have been warning EURUSD bulls that the upward sloping wedge pattern was giving bearish signs and together with the bearish divergence signals by the RSI and the stochastic was a clear warning. In the daily chart as can be seen below, price had already reached the Ichimoku cloud resistance and as I was saying, a rejection at 1.1050 would be a clear sell signal.

eurusd3

In the 4 hour chart below we see a zoomed in view of the bearish wedge pattern that broke down yesterday and has reached the short-term support of 1.09 and the Ichimoku cloud. The form of the rise is clearly corrective and I cannot rule out that this bounce can be a wave 4 since it did not overlap the August lows.

eurusd2

Taking an even closer look we see a bearish flag pattern. Combined with the FOMC tonight and the first rate rise after a decade, we should not be surprised to see this pair reach 1.08-1.0750. However if this pair reaches 1.0850 before the FOMC announcement I would prefer to take profits in my short positions.

Scaling down risk exposure before the FOMC is strongly advised. Good luck trading FED Day people and take care. As always, thank you for taking the time to catch up with my thinking.

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