The 4-hour time frame of EUR/USD with the Ichimoku Kinko Hyo set of technical indicators shows that the pair seems to be on the start of a new downtrend. Bear in mind that EUR/USD recently broke below a short-term rising trend line on the 1-hour time frame, an early sign that the uptrend may be over.
The Chikou span just crossed below the price last week, suggesting that a short position could be a profitable option in the near term. Price is currently moving below the Kijun Sen or blue line, which acts as an indicator of future movement. This means that a downtrend is already underway for EUR/USD.
In addition, the red line or Tenkan Sen is pointing downwards, confirming that the pair is in for more declines. This is typically indicative of market trends, as a horizontal Tenkan Sen shows that the market is ranging while a diagonal one reflects a downtrend or uptrend.
EUR/USD Ichimoku Kinko Hyo Technical Outlook
Euro bears could pounce on the opportunity to short this pair, possibly on a pullback to better prices. A retracement to the resistance zones marked by the orange lines or Senkou span could take place before the selloff resumes.
As of this writing, the first resistance level is at 1.3838 while the second resistance level is at 1.3908. Those looking to short the pair at market can place stops beyond these levels, as these would mark the lines in the sand for any potential pullbacks for EUR/USD. An upside break from these levels would indicate that the downtrend is no longer valid and that further gains could be in the cards for EUR/USD.
Meanwhile, sideways movement for the red line could indicate that consolidation might be expected for the meantime. Do take note though that Germany and France are scheduled to release their PMI figures this week and that these could have a material impact on EUR/USD trading.
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