EURUSD has displayed a promising sign, overcoming a key resistance level. This analysis examines the technical situation and explores potential scenarios for the currency pair.
EURUSD Breaches Resistance:
- 1.0864 Hurdle Cleared: EURUSD has successfully broken above the resistance level at 1.0864. This breakout suggests a potential weakening of the recent downtrend.
Uptrend Resumption or False Dawn?
- Falling Trend Line Resistance in Focus: The next critical hurdle for the bulls (those expecting the price to rise) is the resistance of the falling trend line on the 4-hour chart.
- Uptrend Confirmation: A decisive breakout above this trend line resistance would be a significant development. This move could indicate a completion of the downside move from 1.0981 and a potential resumption of the uptrend.
- Upside Targets: In this scenario, the next potential target zones to watch could be around 1.0940 and even higher at the previous high of 1.0981.
Alternative Scenario: Correction Within Downtrend
- Trend Line Resistance as a Hurdle: If the price fails to break above the falling trend line resistance, the recent bounce from 1.0724 could be interpreted as a correction within the broader downtrend.
- Downturn Resumption: In this scenario, the downtrend could resume after the correction phase. Another potential fall towards 1.0700 could still be on the table.
Support Levels to Watch:
- 1.0790 Initial Support: While the immediate outlook appears somewhat bullish due to the resistance break, it’s important to acknowledge potential support areas. A breakdown below the initial support level at 1.0790 could trigger another decline towards the 1.0700 target zone.
Overall Sentiment:
The technical outlook for EURUSD has become uncertain in the short term. The break above 1.0864 resistance offers a glimmer of hope for a trend reversal. However, overcoming the falling trend line resistance is crucial for confirmation. Conversely, a failure to break above this level could indicate a continuation of the downtrend. Close monitoring of price action around these key levels will be essential in determining the future direction of EURUSD.