EURUSD is trading increasingly bearish over the past five days, heading towards one-month lows, with the technical indicators pointing to further declines in the short-term period. Yet a rebound could be around the corner.
Technically, the price may extend negative momentum in the near term according to the RSI which continues to weaken below its 50 neutral-mark. The MACD gives another bearish signal since it is has diverged further below its red signal line and is set to enter the negative territory. However, the Stochastics suggest that the downfall is overdone, and the market could reverse higher as the green %K line and the red %D line are on track to post a bullish cross below 20, the oversold threshold.
Should the bearish run continue, the 1.1500 round level could provide nearby support ahead of the 1.1400 psychological level. If the latter fails to hold, bears would drive the price towards the 1.1300 bottom reached on August 15, where any decisive close lower could see a strong barrier between 1.1250 and 1.1200, a previous resistance area in June 2017.
On the other hand, a recovery above 1.1560, the 23.6% Fibonacci of the downleg from 1.2412 to 1.1300 could lift the price up to 1.1600 before the 38.2% Fibonacci of1.1724 comes into view. Slightly higher, the area around 1.1750, which acted as resistance recently should be in focus, while a bigger challenge is expected between last week’s high of 1.1814 and the 50% Fibonacci of 1.1854.
In the medium-term picture, EURUSD turned to neutrality after the pullback from the 1.1814 peak and the neutral profile is not expected to change to bullish unless the price breaks back above that top.
