EUR/USD TECHNICAL ANALYSIS: BEARISH
- Euro at 2-month low after breaking trend line set from October bottom
- Hammer candlestick, positive RSI divergence hint a bounce may be due
- Overall trend still looks bearish, suggesting a down move toward 1.07
The Euro extended downward as expected after breaking support guiding its recovery against the US Dollar since early October, sinking to a two-month low. The currency pair is now perched just above support in the 1.0968-90 congestion region.
![Euro vs US Dollar price chart - daily](https://a.c-dn.net/b/1S2U8M/EURUSD-Technical-Analysis-Euro-May-Bounce-But-Trend-Points-Down_body_Picture_1.png)
EUR/USD daily chart created with TradingView
The appearance of a Hammer candlestick here points to indecision, hinting that a bounce might be brewing ahead. Zooming into the four-hour chart seems to bolster the case for such a scenario. It shows positive RSI divergence as prices test support, implying that selling pressure may be ebbing.
![Euro vs US Dollar price chart - 4-hour](https://a.c-dn.net/b/2IloO4/EURUSD-Technical-Analysis-Euro-May-Bounce-But-Trend-Points-Down_body_Picture_3.png)
EUR/USD 4-hour chart created with TradingView
![](https://a.c-dn.net/b/0YPMDo/logo-stripe.png)
![EUR Forecast](https://a.c-dn.net/b/0Hz4RK/500x707Forecast-EUR.png)
![EUR Forecast](https://a.c-dn.net/b/0Hz4RK/500x707Forecast-EUR.png)
Initial resistance is in the 1.1051-65 area, followed by the intersection of former support guiding the recently broken uptrend and a downward-sloping barrier defining the 2020 selloff thus far. The inflection point at 1.1149 adds reinforcement. A daily close above that may call the broader bearish bias into question.
Still, the weekly chart argues for a decidedly bearish long-term trend bias. A break of counter-trend support appears to pave the way below the 1.09 figure. Averaging the depth of prior downswings within the same trend yields 4.6 percent however. If this holds, a move toward 1.07 may be on tap.
![Euro vs US Dollar price chart - weekly](https://a.c-dn.net/b/2UW3ts/EURUSD-Technical-Analysis-Euro-May-Bounce-But-Trend-Points-Down_body_Picture_4.png)
EUR/USD weekly chart created with TradingView
EUR/USD TRADER SENTIMENT
Change in | Longs | Shorts | OI |
Daily | -1% | -4% | -3% |
Weekly | 4% | -10% | -5% |
EUR/USD TRADING RESOURCES
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
To contact Ilya, use the comments section below or @IlyaSpivak on Twitter