The EUR/USD has been bullish since the April low of 1.0520, which missed the March and 2015 low of 1.0462. While the trend appears very sharp in the 4H chart and even in the daily chart, we should start expect resistance for at least a significant pullback, if not a return to the March and April lows.
In the 4H EUR/USD chart, the sharp rally looks scary. Why would you go against a trend? Well, this is not a trend yet because it has not be tested. It is still a breakout and if we have a bearish outlook, we should be cautious as well. But as the market forms a bearish divergence between price and the RSI, we should start looking for resistance.
At the moment, the bullish 4H candles still dominate, but when we start seeing a strong bearish candle in the mix, we can start looking for an attempt back towards the at least the 1.10 handle. A more aggressive bearish outlook can be towards the 1.0850 level.
Then, if the market does fall below 1.08, we are likely to see bearish continuation towards the 1.0462-1.0520 March-April lows.
If EUR/USD can hold above 1.0850 the bullish outlook would be confirmed and we would have upside risk towards the support/resistance pivot area around 1.15.
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