Red lines- bearish channel
Yellow rectangle - expected bottom area
Green lines- bullish divergence
Blue lines- Fibonacci retracement levels
EURUSD is bouncing today. Price is trading around 1.0491 after making a low yesterday at 1.0449. It is too soon to call a bottom. Technically trend remains bearish as price continues making lower lows and lower highs inside the red downward sloping channel. EURUSD has already provided us with a bullish divergence signal. This is not a reversal signal but a sign of weakening downtrend. Resistance by the red channel is found at 1.0610. Around the same area we find the latest lower high. A break above this level would suggest that a short-term trend change is in play. Price is inside the yellow rectangle where we expect to see a major reversal. We believe that the downside is limited from this area. We also find here the 50% Fibonacci retracement level that provides important support.
