Technical Analysis – EURUSD eyes downtrend line

Technical Analysis – EURUSD eyes downtrend line

Technical Analysis – EURUSD eyes downtrend line

Anthony Charalambous, XM Investment Research Desk

EURUSD buyers pushed above 1.0965, which is the 23.6% Fibonacci retracement of the down leg from 1.1249 to 1.0878, despite the negative signals. Regardless of the intact Tenkan-sens’s bearish crossover of its Kijun-sen line and their flattened states, the bulls rallied higher and reversed the pair off a multi-year low of 1.0878.

The short-term oscillators continue to reflect weakening negative directional momentum despite somewhat improving. The MACD remains in the negative area but above its red trigger line, while the RSI rose in the bearish territory before flattening below the 50-level. Moreover, all simple moving averages (SMAs) continue to support the existing negative sentiment.

To the downside if the bears reverse the price back below the 23.6% Fibo of 1.0965, the Tenkan-sen line may apply initial friction ahead of the support of 1.0925 coming from the trough on September 3. Moving lower, the twenty-nine-month low of 1.0878 could be re-tested. Falling past this, the May 2017 low of 1.0840 could draw traders’ attention as their focus turns towards the Gap from April 2017.

If the bulls succeed in pushing higher, the Kijun-sen line could apply the first interruption to the upside. Higher, the resistance region of 1.1020 to 1.1030 could be more challenging as it consists of the 40-day SMA converging with the downtrend line and the 38.2% Fibo. Overcoming it, the 1.1063 barrier which is the 50.0% Fibo coupled with the Ichimoku cloud’s lower boundary, could be next in line. Passing through the cloud, the price may rest near the 61.8% Fibo of 1.1107 before it heads towards the 100-day SMA at 1.1147 and the 76.4% Fibo of 1.1161.

Overall, the short- and medium-term bias remain bearish. A close above 1.1100 would turn the short-term picture into a neutral one while a break below 1.0878 would revive the negative outlook.

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