The EURUSD pair has made a significant move, bouncing strongly from 1.0777 to 1.0926. This impressive rally has resulted in two key technical developments:
- A breakout above the falling price channel visible on the 4-hour chart
- Surpassing the critical resistance level at 1.0870
These developments suggest that the previous downside move from 1.0948 may have completed at 1.0777, potentially marking a trend reversal.
Current Technical Picture
With the recent breakout, EURUSD appears to have entered a new uptrend from the 1.0777 level. This shift in market structure opens up the possibility for further gains in the coming days.
Key Levels to Watch
Resistance Levels:
- 1.0948 (Previous high and next target)
- 1.1000 (Psychological resistance and potential target)
Support Levels:
- 1.0900 (Initial support)
- 1.0890 (Secondary support)
- 1.0865 area (Tertiary support)
Potential Scenarios
Bullish Scenario
The current price action strongly favors a bullish outlook:
- We’re likely to see further rally in the coming days.
- The next target for bulls is the previous high at 1.0948.
- If bullish momentum persists, we could see a move towards the psychologically important 1.1000 level.
This scenario aligns with the newly established uptrend and suggests potential opportunities for traders looking to buy on dips or breakouts of resistance levels.
Consolidation Scenario
While the overall bias is bullish, it’s important to consider potential consolidation:
- The key level to watch on the downside is 1.0900.
- A breakdown below 1.0900 would suggest that a consolidation phase for the uptrend from 1.0777 is underway.
- In this case, the pair might find support around 1.0890, followed by the 1.0865 area.
This scenario doesn’t negate the overall bullish outlook but provides important levels to watch for potential entry points or risk management.
Conclusion
The EURUSD pair has shown impressive strength, breaking out of its previous downtrend and establishing a new upward move. The breach of key technical levels suggests that bulls are now in control of the market.
Traders should keep a close eye on the 1.0948 level as the next significant hurdle. A break above this could pave the way for a test of the 1.1000 level. On the downside, the 1.0900 level serves as initial support, with 1.0890 and 1.0865 serving as backup support zones.
As always, while technical analysis provides valuable insights, it’s crucial to consider broader economic factors affecting both the Eurozone and US economies. Stay informed about economic releases, central bank decisions, and geopolitical events, and remember to implement proper risk management in your trading strategies.