The EURUSD currency pair has seen its bullish momentum accelerate, with the recent upside move from the 1.0600 low extending all the way up to 1.0752 so far. This advance has pushed the pair into a newly-formed rising price channel visible on the 4-hour chart timeframe.
As long as EURUSD remains contained within this bullish channel pattern, the path of least resistance still appears to favor further upside potential in the days ahead. The next key targets to watch on the topside are the 1.0800 handle, followed by a potential test of the falling trendline resistance also seen on the 4-hour charts.
However, it’s important to note that the broader technical outlook remains bearish despite this corrective bounce higher off the 1.0600 lows. Specifically, as long as EURUSD holds below the falling trendline resistance that has been capping rallies since the 1.0981 peak, the current upswing is likely nothing more than a counter-trend correction within the longer-term downtrend.
In this scenario, another bearish leg lower toward the 1.0500 area could potentially be seen once the corrective rebound from 1.0600 runs its course.
In the near-term, the first major support for EURUSD has arrived at the 1.0700 level. A breakdown below this floor could see the currency pair revisiting a test of the bottom of the newly-formed 4-hour bullish channel next. Any violation of channel support would mark a significant technical event, likely exposing the 1.0600 level as the next key downside target.
A move through 1.0600 would raise serious doubts about the sustainability of the corrective rally off the lows, with the focus shifting back toward a potential bearish continuation down to the 1.0500 region thereafter.
For now, EURUSD remains in its short-term uptrend as long as it holds within the bullish channel pattern. But the broader outlook will remain bearish unless the currency pair can push through the falling trendline resistance that has been capping rallies for several months.
Traders will want to closely monitor the price action around 1.0800, the falling trendline, 1.0700 support, and the bottom of the bullish channel in the coming sessions. These levels will be critical in determining whether the corrective rebound can extend further or if the bearish downtrend from 1.0981 is potentially resuming sooner rather than later.