EUR/USD is still in its uptrend for now, although the pair was pushed down to test the channel support on the ascending trend line on the 1-hour time frame. A bounce from this area could take the pair to its previous highs around 1.3600 or perhaps to new highs around 1.3650.
Take note that stochastic is already climbing out of the oversold area, which means that euro bulls are ready to buy this pair again. A tight stop below the channel support should yield a good return on risk.
A breakdown could still be possible, depending on how euro zone events turn out in the coming days. Bear in mind that the ECB interest rate decision is coming up and any talk of negative rates could push this pair down to the 1.3400 level or lower.
By Kate Curtis from Trader’s Way