I hold a short-term bearish directional bias on the EURUSD. Here’s my top-down technical perspective.
On the weekly time frame, price action has been ranging around the 1.22290/1.25420 area for four weeks. As price action has found it difficult to break above the resistance zone, it is likely that we see an attempt by the market to bear southward and regroup for another onslaught on the zone. Last week, an inverted hammer-like candlestick was formed around the zone; which portends the likelihood of a bearish follow through of price action in the days ahead. An ascending trendline (chocolate) from the low of April 2017 is still very much in play and bears may target a retest of the trendline. Such a move southward is likely to expose the horizontal support around the 1.20500 area. However, should bears fail to break down the trendline, bulls are likely to seize the initiative to turn around price action northward.
On the H4 time frame, price action has been consolidating in an ascending channel (magenta) for quite a while. Recent price action is bearing southward from the channel resistance area. An initial target of bears is the channel support or the horizontal support around the 1.22630 area. However, a micro-support trendline (navy) formed by recent price action may be a barrier for a southward move. So, should bears fail to clear this barrier, we may see bulls turn price action northward toward the channel resistance…
I may be wrong. Trade safe and prosper.