EURUSD re-activated its two-year old downtrend after forcefully clearing the 1.0777 floor last week to print fresh lows at 1.0635 on Monday.
The price is currently pushing efforts to recoup some lost ground but the slight improvement in the RSI and the Stochastics, which are still well into the bearish area and near oversold terittory, is not convincing yet, keeping the short-term bias negative. The downside reversal in the 20-day simple moving average (SMA) that is ready to slip back below the 200-day SMA is another discouraging signal.
Should the 1.0777 support level turn a tough resistance, the spotlight will shift back to the 1.0635 base. Breaking that wall, the sell-off could immediately take a breather within the nearby 1.0560-1.0500 restrictive zone from 2017 before accelerating towards a more challenging barrier around 1.0340.
On the upside, a steep rally above 1.1238 is required to resume hopes of an up-trending market, simultaneously switching the medium-term outlook from bearish to neutral. However, the path is hiding several obstacles that could complicate efforts. The nearest is the 1.0777 level followed by the 1.0878 and 1.0930 marks, while higher the bulls should run above the 1.1000 number and the Ichimoku cloud to gain more fuel towards the 200-day SMA and the 1.1100 level. The 1.1170 barrier may also stand tall before the 1.1238 level comes into view.
In brief, EURUSD resumed bearish structure both in the short- and the medium-term. Upside corrections in the short-term would not be a surprise as the pair is trading near oversold levels, though such a case is currently looking weak.
Origin: XM
