EURUSD has reversed down following an aggressive bearish week, which shifted the medium-term positive outlook to negative. The price penetrated the ascending trend line to the downside and recorded a fresh more than three-month low of 1.2054, achieved last Friday. However, the technical indicators are suggesting a retracement of the sharp sell-off.

In the daily timeframe, the RSI indicator is holding in the negative territory, while it is sloping slightly to the upside. Moreover, the %K line of the stochastic oscillator created a bullish crossover with the % D line in negative zone, signaling a bullish correction in price action.

In the event of an upside reversal, the immediate resistance level of 1.2160 could act as a barrier before being able to re-challenge the 1.2220 level. A break above this region would shift the medium-term outlook to a more bullish one again as it would take the pair near the 20- and 40-simple moving averages at 1.2273 and 1.2300 respectively. Further gains would lead the way towards the 1.2410 resistance hurdle.

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Further losses should see the December 2017 high of 1.1900 acting as a major support. A drop below this area would reinforce the bearish structure in the medium-term and open the way towards the next key support level of 1.1720.


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