The EUR/USD currency pair has recently witnessed a significant development, breaking above the 1.0752 resistance level and extending its upside move from the 1.0600 level towards the falling trend line on the 4-hour chart. However, the pair’s attempt to break through this trend line resistance has been met with selling pressure, resulting in a pullback from the 1.0811 level.
As long as the trend line resistance holds firm, the recent rise from 1.0600 could potentially be viewed as a corrective move within the broader, longer-term downtrend that commenced from the 1.0981 high. In this scenario, another decline towards the 1.0500 level cannot be ruled out after the current correction phase.
On the downside, the initial support for the EUR/USD is situated at the 1.0715 level. If the pair fails to hold above this support, it could potentially lead to a breakdown towards the next support level at 1.0648. A breach of the 1.0648 support would shift the focus towards the critical 1.0600 level, followed by the 1.0500 area.
However, if the EUR/USD manages to gather enough bullish momentum and decisively break through the trend line resistance, it would be a significant development, potentially indicating that the downtrend from the 1.0981 high has already bottomed out at the 1.0600 level.
In such a scenario, the next target for the bulls would be the 1.0880 area, followed by the psychologically important 1.1000 level. A sustained move above these levels could potentially solidify the bullish outlook and potentially pave the way for a broader uptrend.
In summary, the EUR/USD is currently at a critical juncture, with the falling trend line resistance on the 4-hour chart acting as a significant hurdle. A failure to break through this resistance could potentially signal a continuation of the broader downtrend, potentially leading to a decline towards the 1.0500 level. Conversely, a decisive breakout above the trend line resistance could indicate that the downtrend has concluded and potentially pave the way for a move towards the 1.0880 and 1.1000 levels.
Traders and investors are advised to closely monitor the price action around these crucial levels, as they could provide valuable insights into the potential direction of the EUR/USD in the coming days.