HomeContributorsTechnical AnalysisEURUSD Correction Halts as Overall Technical Picture Unclear

EURUSD Correction Halts as Overall Technical Picture Unclear

EURUSD is edging higher today as it is trying to find its footing following an eventful week. The pair is hovering a tad below the busy 1.1032-1.1095 area and remains comfortably below the September 28, 2022 upward sloping trendline.  The convergence of the 50- and 100-day simple moving averages (SMAs) persists and thus keeps the door open to a sizeable move soon.

In the meantime, most momentum indicators appear to have reset following their recent decent moves. The Average Directional Movement Index (ADX) is slightly above its 25-threshold and thus pointing to a muted bearish trend in the market, and the RSI is again hovering around its midpoint. More interestingly, the stochastic oscillator is moving lower and has built a good gap from its moving average. However, the current lower low in the stochastic has been met by a higher low in EURUSD, giving rise to the formation of a bullish divergence.

Should the bulls try to take advantage of the stochastic’s developing divergence, they would aim for a move above the busy 1.1032-1.1095 range that is populated by the February 2, 2023 and April 26, 2023 highs respectively. They would then have the chance of testing the resistance set by the September 28, 2022 upward sloping trendline, a tad below the March 31, 2022 high at 1.1184.

On the flip side, the bears are looking for a continuation of the current downleg. If they manage to successfully defend the 1.1032-1.1095 range, they could then have a go at the 1.0905-1.0917 area. This appears to be a strong support region as it is defined by the 50- and 100-day SMAs. Even lower, the path remains tricky with the next key area coming at the 1.0727-1.0735 range.

To conclude, EURUSD bears appear to be still in control, but the developing bullish divergence could quickly reverse market sentiment.

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