EUR/USD is showing more confirming signs of a downtrend on its 1-hour time frame, as the Ichimoku Kinko Hyo indicators are lining up better compared to the previous days.
After a quick pullback to the 1.3800 major psychological resistance and area of interest, EUR/USD consolidated for a few days then broke below the latest support zone. The pair is currently finding a bit of support around the 1.3750 minor psychological level but has formed a bearish flag continuation pattern, as traders await the next market catalyst that could push the pair lower.
Recall that the green line recently crossed below the price, giving an early sell signal last week. At that time though, the red line was still moving sideways, suggesting that euro traders haven’t picked a clear direction just yet. At that time, the blue line was also testing the price as well.
EUR/USD Technical Outlook
With that, EUR/USD might be in for more declines, depending on whether the pair makes a strong break below the 1.3750 area. Take note that it’s the end of the week, month, and quarter so traders might be keen to book profits and a bounce might take place around the pair’s current levels.
However, the resistance levels are expected to hold for the pair. The first resistance level is located at 1.3784 while the second is located at 1.3796. Going short at market with a stop above the 1.3800 handle appears to be a viable option.
Price is currently trading under the blue line as well, which means that the downtrend could be strong. The next visible support zone is around the 1.3600 to 1.3650 minor psychological levels. Today’s set of data from the US, which is mostly comprised of consumer-related reports, could bring in more dollar buyers if the report shows strong results.
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