EURUSD Analysis The daily chart of the EUR/USD pair shows a notable recovery phase transitioning from a long-term downtrend to a potential bullish reversal within a broader structural context. Initially, the pair followed a sharp but consistent downtrend from around 1.2250 before reaching a low of 0.9530. This downtrend was characterized by strong momentum and sustained lower highs and lows, forming a clear descending channel that dominated price action throughout 2021 and most of 2022. After reaching a low near 0.9530, identified as the 100.0% Fibonacci retracement level, the pair began to establish a base and form a clear bearish structure. This low coincided with an extended Fibonacci extension from the previous low, suggesting that the downtrend was over. A strong and impulsive recovery followed, breaking through a key resistance area and signaling the initial stages of a trend reversal. The recent price action around the 1.1387 area confirms the strength of this bullish momentum. This price level lies above several significant pullbacks and previous resistance levels, giving this rally additional technical significance. One of the key levels where bulls have recently rallied is the 38.2% Fibonacci retracement level around 1.1180, which extends from the high of 1.2250 to the low of 0.9530. The fact that prices not only broke through this level, but continue to trade above it, suggests that buyers are regaining control. Just below this, the 50.0% retracement level at 1.0890 served as a key breakout area during the initial uptrend. This level served as a stubborn resistance point during the rectangular area consolidation phase that lasted from mid-2023 to early 2024. Once the price broke this barrier, the structure steadily shifted toward higher highs and lower lows, reinforcing the bullish crossover. Above the current price, the next key resistance is near 1.1670, which coincides with the 23.6% Fibonacci retracement level. This level represents a major psychological and technical failure. A break above 1.1670 would be highly constructive for the bullish scenario and would likely lead to a retest of the 1.2250-1.2300 area, which represents the 0.0% Fibonacci level and the beginning of the extended decline so far. This area is the ultimate target of the current rally, and an eventual breakout from it would confirm a full reversal. Conversely, a failure to fall below 1.1670 could trigger a corrective pullback as traders book profits. Meanwhile, the first support is near the aforementioned 38.2% retracement level at 1.1180. A drop below this support level would be the first sign of short-term weakness and could lead to a correction towards the 1.0890-1.0960 area. Not only does this area contain a 50.0% retracement, but it also coincides with a key structural turning point that has been tested several times during the rectangular consolidation. Failure to maintain this level could lead to a further decline to the 61.8% Fibonacci level at 1.0610. The 1.0610 area is particularly important because it represents a significant Fibonacci convergence and also served as support during the previous sideways move. The overall trend structure indicates a significant change in the market's direction. A strong breakout above the multi-month consolidation range, roughly defined between 1.0450 and 1.0960, would confirm that the base formation process has been completed. Prices are currently well above the long-term downtrend line that defined the previous downtrend. This trend line, which previously acted as strong resistance, has been broken and could act as dynamic support upon retest. Indicators such as the Relative Strength Index (RSI), Stochastic, and Moving Average Convergence Divergence (MACD) provide various short-term signals, but their significance is diminished by the prevailing trend structure. The RSI is currently at 62, indicating an uptrend with no signs of overbought conditions. This creates further growth potential. The stochastic indicator is trending down from its average level, indicating a potential pause or pullback but not a trend reversal. The MACD indicator remains above the zero line on the positive chart, confirming the continuation of the uptrend. Quantitative analysis suggests that recent price increases have been accompanied by increased buying intent. This is an increase in volume. Finally, the EUR/USD chart shows an uptrend from multi-year lows at 0.9530, with prices now moving towards 1.1670 and possibly 1.2250. A break above the key retracement level and consolidation zone suggests the pair has entered a new phase of its uptrend. Support at 1.1180 and 1.0890 will be important to maintain this bullish structure. As long as the price remains above these areas, the trend remains up and deeper targets can be pursued. A pullback to the support level could be viewed as a buying opportunity within this broader uptrend.
