Technical outlook:
EUR/USD continued to drop on Wednesday carving fresh swing lows around the 1.0160 mark as bears remained firmly in control. The pair crawled back above the 1.0200 handle at this point in writing. It needs to break above 1.0270-75 at least to confirm a potential bottom. The intraday support zone is seen around the 1.0130-40 mark for a bullish turn ahead.
EUR/USD produced a downtrend from 1.2350 highs since January 06, 2021, as seen on the daily chart. The entire drop is either complete at 1.0160 or is near to completion soon towards 1.0000. Either way, the downside remains limited from here as bulls prepare to come back in control soon. We are waiting for a bullish reversal signal on the daily chart to confirm.
EUR/USD declined below its December 2016 low at the 1.0350 mark completing the minimum requirement for the larger degree downswing since 2008. Furthermore, please note that recent lows around 1.0350 and 1.0160 have been accompanied by strong bullish divergences on the daily RSI (not shown today). Watch out for a break above the initial resistance at 1.0616 in the coming days to confirm a reversal.
Going forward:
EUR/USD might be looking bearish to most traders as it has dropped yet again from 1.0786 swing highs. But it should be noted that the euro remains close to a multi-year bottom formation around the 1.0000-1.0100 zone as it completes a larger degree corrective drop. Traders might be preparing for a major bottom formation and initiating fresh long positions soon.
Trading plan:
Preparing for a bullish reversal. Wait for confirmation here.
Good luck!
