EUR/USD collapsed yesterday and managed to lose around 215 pips from the opening till the close of the day. Looking at the daily chart, we can see that the pair is now testing the long-term upwards moving trendline, taken from the low of 3rd of January last year. Certainly, for now, EUR/USD is trading above that trendline, but with all this Euro-selling, will the line hold? For now, we remain neutral and continue to observe the price action.
Judging by yesterday’s trading activity, we could expect to see some more selling kicking in today. If so, then the aforementioned trendline could get broken and the bears could push the pair towards May’s lowest point, at around the 1.1510 level. A break below, could interest some more bears joining in the selling action and driving the pair towards the next key area of support at 1.1450.
The oscillators, the RSI and MACD, both have turned lower and are now supporting the potential downside scenario. The RSI moved lower from the 50 barrier and currently, it is pointing slightly to the downside. The MACD, already negative, also changed its course and now is aiming lower, testing its trigger line at the same time.
Alternatively, if the previously mentioned upwards moving trendline is able to withhold the rate from dropping lower, then EUR/USD could retrace back up, in order to recover some of its yesterday’s losses. A move back above the 1.1615 mark could open the path back up to the 1.1650 level. If the buying momentum starts to pick up again, then there could be a chance of seeing the bulls lifting the rate to the key area of resistance at the 1.1720 level, which yesterday acted as an important area of support that got broken to the downside.
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