EUR/USD Forecast: $1.08846 Is The Bullish Reversal Target
2022.04.17 09:55
The EUR/USD price reached the target we discussed in our previous analysis, i.e., $1.07825.
On Monday, the price gapped higher than the previous week’s close. While we did mention the possible retrace to $1.09860, the price only reached a downtrend resistance line.
The bullish Pin bar that appeared on Friday was not strong enough of a signal to take the price to higher levels.
Tuesday was the day the price broke below $1.08846, which was a signal the price would move to the next support level, $1.07825. The price retraced back up to retest $1.08846 as a resistance level and from there continued moving down.
On Thursday, EUR/USD reached the $1.07825 support level and bounced back. But, due to the selling pressure strength, it closed the week at the start of the demand zone around $1.07825.
EUR/USD Analysis
Since we have a strong demand zone around $1.07825—the trigger behind Thursday’s price bounce—we could see a retrace from the current support level.
Friday’s candle closed below the previous three days’ candles, which means sellers were strong enough to push the price more down. But, to break the strong bullish pressure on the demand zone, either above or below the $1.07825 support level, sellers would need to weaken the demand zone.
In order for that to happen, we’ll need to see the price remain above the $1.07825 support level, which has been historically, a strong support level, as mentioned previously. The price has tried—and failed on many occasions—to make that level break, so we could see a repeat of that scenario play itself out.
If the price does, however, manage to make that successful break, we should wait for the retest and a daily price close below this level. That will be the first step in the price’s move down to $1.06736 support level.
On the upper side, price will have a hard time breaking above the $1.08846 resistance level, based on its failed 3 attempts this past week.
We have a downtrend channel resistance line below $1.08846 which will pose an obstacle for the price to reach higher levels. So, we could see only a wick on the upper side without a candle closing the day above.
Since the price is in a downtrend, the best scenario is to look for bearish entry opportunities which can be found around the $1.08846 level where the horizontal resistance level crosses the downtrend channel resistance line.
Check the currency strength meter, we can see that the USD has gained strength, which suggests the EUR/USD price should see further downward motion.
EUR/USD Currency Strength
