EUR/USD has decreased as much as 1.0785 yesterday. The pair is trading right above a confluence area represented by the intersection between the 150% Fibonacci line and the S1 level.
It is still too premature to talk about a potential reversal on EUR/USD, but a minor rebound is somehow expected after the massive drop. The pair has plunged as the USDX has resumed the upside movement, the index has passed above the 99.37 static resistance and now is about to hit against a major dynamic obstacle.
A potential correction on the US dollar index will bring a rebound to EUR/USD, the pair could come back towards 1.0850 level.
EUR/USD has resumed the bearish movement after the failure to reach and retest the lower median line (lml) of the descending pitchfork. I've said in my previous analysis that the pair could reach the 150% Fibonacci line and the S1 (1.0785) level soon. MACD and Stochastic are signaling a potential bullish divergence, but we need a stronger signal to consider a long position.
The pair maintains a bullish outlook as long as it is trapped below the lower median line (lml), you should be very careful because it could drop anytime. A valid breakdown below the 150% Fibonacci line and below S1 (1.0785) will signal a drop towards the S2 (1.0741) level and towards the first warning line (wl1).
EUR/USD was rejected by the mentioned support levels, but I would have liked to see a major false breakdown, a pin bar (hammer) or a bullish engulfing, which it would have signaled that the downside is completed and that we may see a reversal.
- Trading Tips
A major false breakdown below the 150% Fibonacci line and below the S1 level could announce a potential leg higher. So, we have to wait for a reversal pattern, a confirmation, before going long. You should keep an eye on the USDX as well, a potential corrective phase will give us a great long opportunity on EUR/USD. The first upside target is seen at the lower median line (lml), while the second one is at the PP (1.0871) level.
EUR/USD could drop quickly towards S2 (1.0741) and towards the first warning line (wl1) if we have only a minor rebound. We may have a violent drop if the reversal is invalidated.
