In our previous posts on EURUSD we warned bulls that a pull back is imminent. Price was making new higher highs but the RSI was providing bearish divergence signals. We warned that we prefer to be neutral if not bearish. EURUSD despite breaking above the short-term resistance of 1.2240, has turned back down once again and is now challenging short-term horizontal support and the lower channel boundary.
Black lines - bearish divergence
Red rectangle- short-term resistance
Blue rectangle -short-term support
EURUSD is right on top of the channel boundary testing the horizontal support at 1.2180-1.2160. Bulls still have hopes for new higher highs as long as price remains inside the bullish channel. Breaking below 1.2160 will decrease dramatically the chances of a new higher high. Price remains inside the channel and above key short-term support. There is no confirmed reversal signal yet.
