EURUSD was trading not too far from the bearish cross within the 20- and 40-period simple moving averages (SMAs) near 1.0800 in the 4-hour chart, creating a negative movement in the consolidation mode. But momentum indicators suggest some negative moves for the pair to decline further.
The near-term bias is looking neutral-to-bearish as the MACD is flatlining below the trigger and zero lines, while the stochastics are pointing south and the %K and %D lines remain negatively aligned. Also, the red Tenkan-sen line of the Ichimoku lies well below the blue Kijun-sen line, suggesting more losses.
Should EURUSD make another run lower, it’s likely to meet immediate support at 1.0780. A successful break below this resistance area would open the way for the 1.0725 barrier registered on April 24. But before then, the price needs to overcome another hurdle, the lower Bollinger band around 1.0755. Even lower, the three-year low of 1.0635 could come into spotlight.
If the negative momentum fails to hold and prices turn higher, the red Tenkan-sen line at 1.0813 is the nearest resistance that could halt steeper increases. A potentially more important resistance, though, is the 1.0840 level, which stands near the lower surface of the Ichimoku cloud and the 20-period SMA at 1.0854. If breached, it would shift the focus to the upside and prices would climb inside the cloud, flirting with the 40-period SMA at 1.0878 and the blue Kijun-sen line at 1.0900. Above that, the upper bound of the Bollinger band at 1.0957 and the 1.0990 – 1.1018 area could attract attention.
In the bigger picture, EURUSD would need to make a sustained fall below the three-year low of 1.0635 in order for the outlook to become convincingly bearish again.
