When conducting analysis, I tend not to focus too much on movements on smaller time frames, as they often create bias and provide signals that are out of sync with the main trend. Therefore, my primary reference remains the weekly time frame to determine the overall market direction. The weekly chart shows that the downtrend remains very strong. This is reinforced by the price's successful breakout of the key support level at 1.141, confirming the validity of the bearish structure. As long as the price remains below this level, the likelihood of a decline still outweighs the likelihood of an increase. If selling pressure persists, the next target could potentially be the next support area around 1.121. Moving to the daily time frame, bearish pressure also remains very dominant. The price is still moving below the middle Bollinger Bands and also below the 50-day Exponential Moving Average (EMA), indicating that sellers are still controlling the price movement. Furthermore, the MACD histogram is starting to widen back into negative territory, indicating increasing selling pressure. If the MACD line successfully breaks below the signal line, this could serve as further confirmation that bearish momentum is strengthening again and open up opportunities for a continuation of the downtrend in the EUR/USD currency pair.
Meanwhile, on the H4 timeframe, the increase so far can still be categorized as a correction within a downtrend. From a price action perspective, the price movement is forming a compression pattern, which often presages the formation of a bearish flag continuation pattern. This pattern generally indicates a temporary pause after a significant decline before the trend resumes downward. The support area at 1.138 is a crucial level to watch. If the price breaks through this level and breaks the trendline on the H4 timeframe, the likelihood of further decline will increase. Currently, the price is still stuck below the 50-day moving average (EMA), so bearish pressure remains dominant. If the price moves back below the middle Bollinger Bands, this will further strengthen the signal for a continued downtrend. Based on the combined analysis on the weekly, daily, and H4 timeframes, it can be concluded that the EUR/USD currency pair remains in a bearish condition, with a higher probability of decline than increase. Therefore, the most relevant scenario is to wait for confirmation of a breakout in the 1.138 area before considering a sell position. A trading plan to consider is an entry around 1.138, with a stop-loss above 1.148 to limit risk, and a minimum profit target in the 1.132 area. As long as the US dollar remains strong and there are no significant technical structural changes, this bearish scenario still has a significant chance of shaping EUR/USD's direction in the near term.
