EUR/USD: Downtrend Could Continue
2022.05.05 15:41
After several days of stagnation near the support level of 1.0500, the EUR/USD pair managed to rebound from it. The jump was also supported by high speculative activity. As a result, the pair surged by more than 100 pips and returned to the local low of 1.0636 recorded in spring 2020.
On the four-hour chart, the RSI technical indicator upwardly crossed line 50, thus signaling the end of stagnation. In the same period, the Alligator’s moving averages changed their direction to upward from downward. However, this picture is reflecting only a short-term trend.
On the daily chart, the Alligator indicator is pointing to a downward mid-term trend. There is no intersection between moving averages.
Outlook
A slowdown in the upward movement near 1.0636 caused a consolidation formed from mixed Doji candlesticks. This, in turn, may lead to a new wave of speculative activity. That is why we should consider two possible scenarios.
According to the first one, the euro/dollar pair may drop from 1.0636. If it settles below 1.0600, sellers may start opening positions, thus pushing the pair lower to the support level of 1.0500. The second scenario presupposes a full-fledged correction. In this case, the price consolidation above 1.0655 may spur a jump to 1.0700-1.0800.
In terms of the complex indicator analysis, we see that technical indicators are signaling buy opportunities in the short-term and intraday period amid a rebound. In the mid-term period, the indicator is providing sell signals due to the main trend.
