The EUR/USD, which was bullish last week, found resistance at 1.0848 and completed a price top to start this week. In the 1H chart we can see the market complete this top as it fell below 1.0733.
Today, as we get into the 4/21 US session, we saw buyers at 1.0660 as the 1H RSI tagged 30. This bounce could simply be a correction out of the oversold condition, but the fact the RSI was able to tag 30 actually reflects revival of bearish momentum. If price can return below 1.07 after today’s rebound, the bearish outlook should remain in play, with pressure towards the 1.0520 April low, with risk of extending towards the 1.0462 low on the year.
Now, this rebound in the US session has cracked a falling channel resistance and is popping up above the cluster of 200-, 100-, and 50-hour simple moving averages (SMAs). These are signs that EUR/USD wants to continue its bullish correction. If the RSI breaks above 60, and price holds above 1.07 on a pullback, then we can be more confident of the bullish outlook, which has at least the 1.0848 high in sight.
EUR/USD Daily Chart
(click to enlarge)
In the daily chart, we can see that above 1.0848, further bullish correction in the short-term has the 1.1050 highs in sight, with risk of extending to 1.11. However, because the prevailing trend is still bearish, and the overall fundamentals still favor the USD to the EUR, we should limit the bullish outlook. Currently, the signs that EUR/USD remains bearish in the daily chart are:
1) Price is under the 200-, 100-, and 50-day SMAs, which are sloping down and in bearish alignment.
2) The RSI has been tagging 30 and holding under 60, showing persistent bearish momentum.
When these 2 technical conditions are no longer true, then we can say EUR/USD is turning bullish. For now, the bullish outlooks are corrections to be faded.
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