The EURUSD pair has recently attempted to break above the top of the falling price channel visible on the 4-hour chart. However, this attempt has failed, suggesting that the downtrend from the 1.0948 level remains intact. This failed breakout provides important insights into the pair’s current technical situation and potential future movements.
Current Technical Picture
The inability to breach the channel resistance reinforces the bearish sentiment in the market. This price action indicates that sellers are still in control and that the path of least resistance remains to the downside.
Key Levels to Watch
Support Levels:
- 1.0770 (Next potential target)
- 1.0725 area (Secondary target)
Resistance Levels:
- Top of the falling price channel (Current resistance)
- 1.0870 (Key resistance level)
- 1.0948 (Previous high and major resistance)
Potential Scenarios
Bearish Scenario
The current price action suggests a continuation of the downtrend:
- We’re likely to see further decline in the coming days.
- The next target for bears is around the 1.0770 level.
- If bearish momentum persists, we could see a move towards the 1.0725 area.
This scenario aligns with the current downtrend and suggests potential opportunities for traders looking to sell on rallies or breakouts of support levels.
Bullish Scenario
While less likely given the current trend, a bullish scenario is still possible:
- The key level to watch is the resistance of the falling price channel.
- A breakout above this channel resistance could drive the price towards the next significant resistance at 1.0870.
- If the pair manages to break above 1.0870, it would suggest that the downside move has completed.
- In this case, we could see another rise towards the previous high at 1.0948.
However, it’s important to note that this scenario would require a significant shift in market sentiment and potentially supportive fundamental factors.
Conclusion
The EURUSD pair appears to be maintaining its downward trajectory, with the recent failure to break above the channel resistance reinforcing the bearish outlook. Traders should keep a close eye on the identified support levels at 1.0770 and 1.0725, as these could provide important opportunities in the coming days.
On the upside, the channel resistance and the 1.0870 level are crucial. A break above these levels would signal a potential trend reversal, but this seems less likely in the current market conditions.
As always, it’s crucial to consider broader economic factors affecting both the Eurozone and US economies, as these can have significant impacts on the EURUSD pair. Stay informed about economic releases, central bank decisions, and geopolitical events, and remember to implement proper risk management in your trading strategies.