EURUSD had a flash downside correction below the downward-sloping channel today, stretching its ten-day old sell-off to a three-year low of 1.0725.
The MACD continues to lose momentum below its trigger line, the RSI is making its way down below its 30 oversold level, while the stochastic oscillator is reversing south again, all signaling a bearish trading in the short-term. Also, the 20- and the 40-period simple moving averages (SMAs) are following the price action down.
Should weakness extend, support could be initially detected within the 1.0775 – 1.0800 support area before the 1.0725 trough comes into view. Lower, the 1.0500 – 1.0560 zone taken respectively from February and April on 2017 could be the next target.
Alternatively, a jump higher could find resistance at the 23.6% Fibonacci retracement level of the bearish move from 1.1495 to 1.0725 at 1.0970. Overcoming this barrier, the 1.0985 level and the 38.2% Fibonacci of 1.1025 could be stronger obstacles.
In the medium-term picture, a closure below 1.0775 would shift the outlook to bearish.
