EUR/USD has bounced back from a very strong dynamic support, but the bullish momentum could be only temporary if the USDX will have enough energy to increase again. The pair is traded at 1.0839 level and is fighting hard to approach and reach the near-term resistance levels.
The USDX has plunged in the short term after the failure to reach the 100.93 former high and has forced the USD to depreciate versus the EUR, but the index remains somehow bullish, so another USDX's rally will send EUR/USD down again.
The pair has found strong support at the weekly S1 (1.0733) level and has registered only a false breakdown below the first warning line (wl1) of the orange ascending pitchfork. I've said in the previous week that the price could drop further after the valid breakdown from the extended sideways movement and below the 1.0816 and I've mentioned S1 level as a potential downside target.
A valid breakdown below the warning line would have confirmed a larger drop. The resistance is seen at the R1 (1.0903) level and at the 1.0917 level.
- TRADING TIPS
EUR/USD is trapped within a sideways movement between the 1.0772 and the 1.0990 levels, so only a valid breakout from this range will give us a fresh trading opportunity and a clear direction.
So, I believe that we'll have a major increase only if the price makes a valid breakout above the R2 (1.0984) level, while a selling opportunity may appear if the price makes a valid breakdown below the first warning line (wl1) of the orange ascending pitchfork.
A valid breakdown below the warning line (wl1) will validate a further drop and you could use the S2 (1.0654) and the S3 (1.0563) levels as potential downside targets.
