EURUSD has been underperforming over today’s session, after the bounce off the 20-day simple moving average in the short-term. The world’s most traded currency pair is trying to snap the two consecutive winning days, while it is in the process of forming a double bottom pattern with trough the 1.1510 barrier and with neckline the 1.1840 resistance level.
In the daily timeframe, the technical indicators seem to have lost some of their strong bullish momentum. The Relative Strength Index (RSI) is sloping slightly to the downside in the negative zone, while the MACD oscillator is rising marginally above its red-trigger line below the zero level.
If price action jumps above the 20-SMA of 1.1670 and the 38.2% Fibonacci retracement level of the upleg from 1.0340 to 1.2550, around 1.1710 and also, surpass the 40-SMA of 1.1750 at the time of writing, there is scope to test the aforementioned neckline of 1.1840. This is considered to be a strong resistance area which has been rejected a few times in the past. Rising above it would see a completion of the pattern and would drive the price towards the 1.2000 psychological hurdle, which overlaps with the 200-day SMA.
On the flip side, if 1.1510 support fails, then the focus would shift to the downside again towards the 50.0% Fibonacci of 1.1450. A break of this barrier would increase downside pressure and bring about a resumption of the bearish mode. From here, EURUSD would be on the path towards the 1.1300 handle.
Overall, the single currency has been trading in a reversal pattern against the greenback. Near-term weakness is expected to remain as long as price action takes place above 1.1510 and below the neckline of 1.1840.
