EUR/USD looks bearish despite recent bounce off 23.6% Fibonacci.

EUR/USD is trying to push over the upper boundary of the Ichimoku cloud at 1.1063 after the drop on November 4 bounced off the 1.1005 support, which is the 23.6% Fibonacci retracement of the down leg from 1.1411 to 1.0878. However, the bearish crossover by the downward sloping Tenkan-sen line leans toward a down move, while the turn back down in the 20-day simple moving average (SMA) reinforces the bigger negative picture.

The short-term oscillators are still in the negative region but suggest some improvement in the price. The MACD, despite having distanced itself below its red trigger line and into the negative zone, has eased slightly. The RSI also declined into negative territory but has reclaimed its neutral mark. The flat 50-day SMA and Kijun-sen lines are worth mentioning, suggesting that the price could stall for a while.

If sellers manage to push the pair back down, initial support could come from the 50-day SMA at 1.1040, while lower in the cloud the 23.6% Fibo of 1.1005 and slightly beneath, the swing low of 1.0990. Surpassing this, a support area from 1.0940 to 1.0925 could challenge the bears ahead of the multi-year low of 1.0878.

To the upside, a tough resistance region from 1.1063 to 1.1090 – where the 20-, 100-day SMA, Kijun-Sen line and 38.2% Fibo are located – could deny a further climb to test the 50.0% Fibo of 1.1145 and 200-day SMA residing at the 1.1175 swing highs.

In brief, the short-term looks neutral-to-bearish and a break below 1.0990 would reinforce the negative sentiment. However, a break above 1.1175 could return a medium-term neutral bias.


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This information is not considered as investment advice or investment recommendation but instead a marketing communication. This material has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.

Source: XM

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