EUR/USD is under pressure again after finding support around 1.1196, which is the 23.6% Fibo retracement of the up leg from 1.1026 to 1.1249 and the 1.1180 level from June 18.
After failed attempts to move above the downtrend line, the EUR/USD pair has traded between the 100- and 200-period simple moving averages (SMAs) for the past week. The bears have gained some strength and are pushing for lower, testing the 100-SMA.
The MACD and the RSI’s picture suggest a restart in the negative directional momentum, as the MACD remains below its trigger line and is approaching the zero line from above, whereas the RSI has declined below the 50-level trying to break the uptrend line downwards. Despite this view the 50-SMA warns of a possible continuation of a sideways move.
If price manages to pierce below the 100-SMA of 1.1163 where the 38.2% Fibo also lies, some interruption to the down move could come from the 50-SMA and Ichimoku cloud slightly lower. If the bears pick up momentum, the next support may come from 1.1138 which is the 50.0% Fibo and outer band of the cloud. Only a penetration of the strengthened support region of 1.1150 – 1.1106 could bring focus back to the twenty-six-month low of 1.1026 from August 1.
To the upside, if the EUR/USD climbs higher than the 200-SMA and smashes through the downtrend line, the swing high of 1.1249 could be tested, before turning to the higher peak around 1.1280.
Summarizing, the long- and medium-term bias is bearish, with the short-term looking neutral-to-bearish. But traders should be cautious of a move north past 1.1249 which may shift the short-term to neutral.
by Anthony Charalambous, XM Investment Research Desk
Zero Spread XM
