The pair traded mixed last week ending it only slightly lower than the previous week. However, Friday’s candle suggests there is more of the downward price action to come. The MACD oscillator confirms this view with a bearish trend and a very strong bearish momentum.
There is support 100 pips lower, at around 1.1050 provided by the previous low on the chart and from the broken resistance line of the downward channel (blue lines) which can now act as support.
To the upside, we can use Friday’s high as resistance in the near term. If the market starts to move up and challenges the Friday’s high then the downward continuation will be under question.
EURUSD Daily chart – Poised to move lower!
There are no clear chart patterns or trendlines on the 4h chart so we’ll have other ways to gauge where EURUSD will likely trade. The pair is currently trading at the middle weekly pivot point and whether it stays above or below it will have different implications for the direction of EURUSD. As a rule of thumb, if the price stays above a middle pivot point that is bullish while if it stays below the pivot point that is generally considered bearish.
Note here, that slightly below the resistance of Friday’s high is the weekly resistance 1 providing additional resistance to this area. So, if EURUSD starts moving up it will be important that the rally stops somewhere in this area in order for the downtrend to stay intact.
The 61.8% (1.11) and 100% (1.1011) Fib extensions are support levels to the downside.
EURUSD 4h chart – 1.1250 needs to hold for a continuation of the downtrend
The small channel and the resistance trendline are important here. The price action will most likely respect both of them with the higher probability scenario being that EURUSD will continue the downtrend from the downward trendline (thick black line). This line is also important because it falls in the same area of resistance (1.1225 – 1.12150) close to the Friday’s high thus additionally underlying its importance.
EURUSD 1h chart – Watch the trendline!
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