EURUSD has found temporary relief at the 1.0723 support level, bouncing back to reach 1.0783. This raises the question: is a period of consolidation brewing, or will the downtrend from 1.1139 resume soon? Let’s analyze the technicals to understand the potential scenarios.
Consolidation or Downtrend Continuation?
- Support Bounce: The bounce from 1.0723 suggests that sellers might be encountering some resistance, potentially leading to a period of consolidation between 1.0723 and 1.0830 in the near term.
Downtrend Remains in Play
- Key Hurdle: As long as the price remains below the falling trend line on the 4-hour chart, the downtrend from 1.1139 is technically still in play.
- Potential Downside Target: If the consolidation breaks down and the price falls below 1.0723 support, the next potential target could be the 1.0670 area.
Upside Breakout Possible, But Confirmation Needed
- Breakout Hope: A decisive break above the 1.0830 resistance level could signal a bullish shift.
- Next Hurdle: However, even if the price surpasses 1.0830, the real test would be overcoming the falling trend line resistance. This would be a strong indication that the downtrend has ended.
- Further Upside Potential: If the trend line is breached, potential targets could include 1.0897, followed by 1.0932.
The current price action paints an uncertain picture for EURUSD. While consolidation within the mentioned range is likely, the trend’s direction remains unclear. A confirmed breakout above the trend line is crucial to believe in a sustained bullish move. Conversely, a breakdown below 1.0723 would solidify the downtrend.