EUR/USD traded lower today, and at the time of writing, it appears to be flirting with the upside support line drawn from the low of March 22nd and the 1.0850 support barrier. The rate has been trading above that line, but also below another, downside one, drawn from the peak of March 16th. Thus, we will take a neutral stance for now and wait for the rate to break one of those two lines.
If the bears are strong enough to overcome the upside line and the 1.0850 hurdle, we could then see them aiming for the lows of April 3rd and 6th, at around 1.0770. They may decide to take a break from near that zone, thereby allowing the rate to rebound somewhat, but as long as it would be trading below the upside line, we would see decent chances for another leg south. The 1.0770 may be violated this time around, something that may pave the way towards the 1.0670 zone, or the 1.0635 territory, marked by the low of March 22nd.
Looking at our short-term momentum studies, we see that the RSI lies below 50 and points down, while the MACD lies fractionally below both its zero and trigger lines. Both indicators detect negative speed and support somewhat the notion that EUR/USD may overcome the pre-mentioned upside line this time around.
In order to start examining whether the bulls have stolen the bears’ swards, we would like to see a decent recovery above 1.1040, near the peaks of March 31st and April 1st. The pair would already be above the downside line drawn from the high of March 16th, something that may set the stage for extensions towards the 1.1145 zone, defined as a resistance by the highs of March 27th and 30th. Another break, above 1.1145, could carry more bullish implications, perhaps targeting the high of March 16th, at 1.1235.
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