EURUSD bears moved the pair below the 1.1026 low of August 1 as well as the 1.1000 hurdle, which is the 23.6% Fibonacci retracement level of the down leg from 1.1411 to 1.0925. The price had deflected off the 1.1110 level where the 42-day simple moving average (SMA) merged with the downtrend line, rendering the double bottom pattern obsolete.
While the SMAs imply a negative outlook, the momentum indicators concur, with the RSI declining below the neutral level, and the MACD loading for another cross below its red trigger line in the negative zone. Traders need to be aware of the Tenkan-sen and Kijun-sen lines, which have remained flat during this move.
If the bear’s resurface brings further losses, the pair could drop to test the 1.0940 support. Taking full control of the reins, the twenty-eight-month low of 1.0925, already tested twice, could prove to be a tougher obstacle prior to trader’s attention shifting to the May 2017 level of 1.0890.
In the positive scenario, the bulls would need to initially reverse the price back above the 1.1000 hurdle and the 1.1026 resistance. If buying orders manage to raise the price above the 38.2% Fibo of 1.1050, the bulls could then face the restricting downtrend line presently at 1.1070. Breaching above, the nearby 42-day SMA, coupled with the 50.0% Fibo of 1.1087, could apply the pressure ahead of the swing high of 1.1110.
Overall, the short- and medium-term biases remain negative and a close below the 1.0925 would revive the downward move. However, an initial break above the downtrend line would be needed to consider a shift in the bias
