Technical Analysis – EURUSD bulls run out of steam near 1.1900; trend bearish

EURUSD is struggling to set a foothold above the 200-day simple moving average (SMA) despite inching above that line to reach an almost three-week high of 1.1926 last week. The 38.2% Fibonacci retracement of the 1.2242 – 1.1703 down leg seems to be another struggle in the neighborhood, preventing any close above the 1.1900 level.

The technical indicators keep reflecting some caution in the market as the RSI is striving to extend beyond the 50 neutral mark and the Stochastics are already flattening in the overbought territory. The persisting downside pressure is also evident in the Ichimoku lines, which moved to the sidelines before erasing the negative gap between them. Yet, given the recent improvement in those indicators and the positive momentum in the MACD, some optimism is still alive.

If the 1.1900 hurdle gives way, the price may find a tougher obstacle around the 50-day SMA and the 50% Fibonacci of 1.1972. A break above that bar, and particularly a close above 1.2000, could add fuel to the rally, sending the pair quickly into the 1.2070 – 1.2090 region formed by the 61.8% Fibonacci of 1.2070 and the surface of the Ichimoku cloud. Still, the bearish trend will not end unless the pair posts a higher high above 1.2175. Note that the 20- and 200-day SMAs have recently bearishly crossed each other, reducing the case for a trend reversal.

Should the bears take over, the 20-day SMA and the 23.6% Fibonacci of 1.1830 could first come into view. Failure to pivot here may activate fresh selling orders towards the 1.1760 – 1.1700 support region, where any violation would shift the spotlight straight to the 1.1620- 1.1600 key territory.

Summarizing, EURUSD has yet to confirm a bullish bias in the short-term picture despite the rebound of 1.1700. A close above 1.1972 could provide credence to the recent bullish action, while a drop below 1.1830 could confirm additional negative corrections.  

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