EUR/USD Technical Update – Bears Slowing Down

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EUR/USD Technical Update - Bears Slowing Down

The EUR/USD has been falling persistently in March. The Fed and ECB’s monetary policies point to the opposite side of the spectrum and should continue to pressure the pair in the medium-term. Let’s take a look at the charts.

EUR/USD 1H Chart 3/16
eurusd 1h chart 3/16
(click to enlarge)

Even in the 1H chart, we can see that all the technicals are bearish. The 200-, 100-, and 50-hour simple moving averages (SMAs) are sloping down and in bearish alignment. Price is holding below these moving averages. Furthermore the 1H RSI has held below 60, which shows maintenance of the bearish momentum. The only thing we might say is that the bearish trend seems to be flattening out a bit since last week, and the RSI didn’t dip as low as it did earlier in the month, showing that the bears are not as intense in last week’s trading.

EUR/USD 4H Chart 3/16
eurusd 4h chart 3/16
(click to enlarge)

The 4H chart also shows bears dominating the market based on price action, moving averages and the RSI. Like the 1H chart it does show a little slowing down since last week, especially with a bullish divergence between price and the RSI. It is very possible that the EUR/USD might be looking to pull back this week, especially if we see USD pare its gains across the board. However, we should probably limit any bullish outlook first to the 1.07 handle, and watch the 4H RSI as it approaches 60, because that is when the bears are likely to revive the downtrend if the market is indeed still bearish.

If we continue looking at the higher time-frames (Daily, Weekly and Monthly), we will see that the RSI readings are all below 30 (in oversold territory). A bearish market can have OS conditions for quite some time in a bearish market. But now, if there are any doubts regarding the FOMC’s plans to raise rates around mid-year, the EUR/USD will easily rebound.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.