EURUSD recorded three consecutive green days following the rebound on the 14-month low of the 1.1300 strong psychological level, achieved on August 15. The technical indicators continue to move in bearish zones, with the RSI flattening below the threshold of 50 and the MACD oscillator developing beneath zero and its red signal line. However, the stochastic oscillator is approaching the positive zone as it is pointing up. Moreover, the price is still trading below the 20- and 40-simple moving averages (SMAs) in the daily chart.
If the price remains above 1.1300 (immediate support), there is scope for a test at the 1.1510 – 1.1530 significant resistance zone. Clearing this key area could see additional gains towards the 40-day SMA around the 1.1600 handle. Rising above it could see prices re-testing the 1.1750 peak, taken from the highs during July.
On the flip side, if 1.1300 support fails, then the focus would shift to the downside towards the 61.8% Fibonacci retracement level of the upleg from 1.0340 to 1.2550, near 1.1185. A drop below this level, could increase downside pressure, sending the pair down to the 1.1115 barrier.
In the bigger picture, EURUSD has been in an aggressive selling interest over the last six months and the negative outlook could stay in place as long as the 20-day SMA holds below the 40-day SMA.
