The EURUSD currency pair has staged an impressive rally from the 1.0600 low, breaking above the 1.0752 resistance level and extending its upside move to test the falling trendline resistance visible on the 4-hour chart. However, the pair has so far failed to break through this key trendline barrier, pulling back from the 1.0811 high.
Trendline Resistance Capping Rallies
As long as the falling trendline resistance holds on a closing basis, the recent rally from 1.0600 is likely to be viewed as a corrective bounce within the broader downtrend from the 1.0981 high.If the trendline resistance continues to cap the upside, another leg lower toward the 1.0500 area could potentially unfold after the current correction runs its course.
Key Support Levels to Watch
In the near-term, the first level of support to watch on the downside is at 1.0715. A breakdown below this level could see the EURUSD pair retrace back toward the 1.0648 support zone.If sellers manage to push the pair below 1.0648, the next key support objectives would be the 1.0600 and 1.0500 areas.
Potential Bullish Breakout
On the flip side, a bullish breakout above the falling trendline resistance would likely signal that the broader downtrend from 1.0981 has completed at the 1.0600 low.In this scenario, the EURUSD would have room for a more substantial recovery, with the next key upside targets in the 1.0880 and 1.1000 zones.
Key Level to Watch
For now, the key level to watch in the EURUSD is the falling trendline resistance on the 4-hour chart. As long as this trendline holds, the overall technical bias will remain bearish, with the potential for another leg lower toward 1.0500 after the current correction.
However, a breakout above trendline resistance would be a significant technical event, likely opening the door for a more meaningful recovery toward the 1.0880 and 1.1000 resistance areas.
The EURUSD finds itself at a critical technical juncture after stalling at the falling trendline resistance. The direction of the next big move will likely be determined by the pair’s ability, or inability, to clear this key barrier in the sessions ahead.