A EUR/USD guide on how long-term trends reverse

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It is natural for traders to fade the trend.

Seeking value, one expects that elevated prices after a steep uptrend mean overpriced and low prices after a big correction always mean underpriced.

Looking for value is something natural for the Homo Economicus. When we go to the store, we are looking for discounts.

But with Markets, discounts don't always translate well with good trades.

The steep uptrend in EURUSD from January to the 1st of July brought the pair from 1.01 (close to parity) to 1.18 in a spectacular move.

Those who bet on a reversal then initially got proven right, with the pair falling 4,000 pips during the same month. But, those who were expecting a full downtrend to form got met with a slap in the face.

From end-July to the September FOMC meeting, the pair actually consolidated and went to break new yearly highs – Currently at 1.19188.

Such a strong uptrend usually leaves banks and algorithms looking for spots to re-enter the trend. These strong flows lead to consolidation and continuation of the trend.

Now turning to today – A bearish divergence double-top made at the new yearly highs is following with what resembles a longer-run correction.

The lesson ? Strong trends often don't reverse in one shot – Double tops tend to be more accurate signals and the same works on all timeframes.

Let's explore a multi-timeframe EUR/USD analysis to look into the details.

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EUR/USD multi-timeframe analysis

Weekly Chart

EUR/USD Weekly Chart, October 13, 2025 – Source: TradingView

The 2025 rise got met with a two-wave top before the ongoing correction move formed.

As can be observed, the uptrend was spectacular in EUR/USD throughout the first six months of trading with the first move, almost uninterrupted, leading to a +16.40% move in a tight bull weekly channel.

The key to spot on the weekly chart, is how momentum did not follow the second wave to the new highs which happened very fast.

For those who did not witness the move that formed the new 2025 peak in the pair, a flash US dollar pair right before the September FOMC meeting on low volumes led to the current 1.19188 wick.

A lack of consistency, time and volume in the second move is typically where divergences form, and this one was no exception.

After the divergence, players tend to require confirmation with price action: A long-top doji got followed by a lower weekly candle for the last week of September, leading to a break of the 2025 steep uptrend.

Daily Chart

EUR/USD Daily Chart, October 13, 2025 – Source: TradingView

Looking closer, we see how the September 17 price extremes got met with sharp rejection.

Breaking through multiple levels in a more progressive fashion than the end-July correction, the price action has formed a downward channel.

About that first 4,000 pip correction in end-July, keep in mind in any trend reversal that happens in a sudden crash tends to be met with consequent dip-buying.

Emergency selloffs/steep squeezes tend to not be sustainable moves but still mark a change of sentiment in the price action (which tends to scare the most leveraged participants the most).

If the trend resumes after, the price action might be less clear; exactly what happened between August to mid-September.

Downward channels tend to be more resilient due to their consistent and progressive speed.

4H Chart and levels

EUR/USD 4H Chart, October 13, 2025 – Source: TradingView

Keep an eye on the bearish cross between the 4H MA 50 and 200.

A rebound at the immediate support would be an important checkpoint for bulls to maintain – the mid-line of the downward channel tends to be spots to monitor.

On the other hand, a break of the immediate support should engage a further continuation of the selloff.

Levels of interest for EUR/USD trading:

Resistance Levels:

• 1.1630 Intermediate Pivot
• 1.1750 mini-resistance
• Main resistance 1.18 to 1.1830
• 1.19188 2025 highs
• Sep 2021 Highs – Resistance 1.19 to 1.1950 Zone

Support Levels:

• 1.1560 to 1.16 support (immediate support)
• 1.1470 Pivotal Support
• 1.1350 to 1.14 Main Support
• August 1st lows at 1.13916

Safe Trades!

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