EURUSD opened the week on a neutral note, keeping its footing around the 1.1845 level and near June’s lows despite inching to a three-month low of 1.1806 on Friday.
Trend signals remain daunting as the price continues to trade comfortably below its simple moving averages (SMAs) and under the Ichimoku cloud, which proved to be a tough resistance area to overcome last week. The negative cross between the 20- and 50-day SMAs is further dashing any hopes for trend improvement.
As regards the market momentum, some optimism seems to be building over an upside correction as the RSI has paused its downtrend around the 30 oversold level and the Stochastics have created a higher low to exit their oversold territory.
In the event the bulls take control, the 61.8% Fibonacci of the 1.1703 – 1.2265 up leg at 1.1882, where the restrictive red Tenkan-sen line is currently hovering, will come first into view. A violation at this point may see another challenging battle around the cloud’s bottom line and near the 50% Fibonacci of 1.1984. If buyers claim that zone this time, the 38.2% Fibonacci of 1.2050 could immediately add some downside pressure, deterring a continuation towards the 23.6% Fibonacci of 1.2132 and the cloud’s upper boundary seen at 1.2160.
Should the bears dominate, driving the price below the 1.1800 number, the spotlight will shift to the crucial 5-month low of 1.1703, where any step lower will put the pair in a bearish position in the medium-term picture. The long-term outlook will also face a deterioration if the decline extends below the 1.1600 mark.
In brief, although EURUSD continues to face unfavorable trend signals, the odds for an upturn seem to be growing, with the confirmation expected to come above 1.1882.
EURUSD bears take a breather after 3-month low