EUR/USD is trading in the green on the H4 chart but the bias is bearish in the short term. The price has increased as the USDX has found strong resistance and now it slips lower. Technically, the pair has come back to test and retest the broken downside obstacles before resuming the corrective phase.
USDX could resume its rebound after the current minor decline. EUR/USD should drop deeper if this scenario takes shape. We have a strong negative correlation between the US Dollar Index and EUR/USD.
EUR/USD Corrective Phase!
I've told you yesterday that EUR/USD should resume its corrective phase if it stabilizes under the median line (ml) of the ascending pitchfork. The price has retested the median line (ml) and now it could extend its sell-off.
The price is traded below the S1 (1.2158) at the time of writing. Stabilizing under this static support could bring a short opportunity. Personally, I've drawn a minor descending pitchfork to encapsulate the price.
EUR/USD has plunged through the median line (ML), it has retested it indicating a further drop towards the lower median lines (LML, lml).
Trading Tips!
The short-term bias is bearish as long as EUR/USD is traded under the median lines (ml, ML) and below the S1 (1.2158). The median line (ml) retest followed by a strong bearish candle suggests selling.
Closing below 1.2132 represents a selling signal as well. Also, a false breakout above 1.22 could be used as a selling opportunity.
The 1.2000 psychological level could be used as the first downside target. A larger drop will be signaled by a valid breakdown below the lower median lines (LML, lml).
