EURUSD Reverses; Short-Term Outlook Still Cloudy
2023.08.21 09:33
opened moderately higher on Monday after almost touching the 1.0830 support area, which sparked the exciting rally to a 17-month high of 1.1275 last month.
The pair experienced five negative weeks in a row, retreating below the trendline that connects the lows from September 2022 and below its 20- and 50-day exponential moving averages (EMAs).
The recent small red candlesticks and an oversold stochastic oscillator suggest that selling pressure is dwindling. Also, the price bounced off the lower Bollinger band last Friday, making an upside correction possible in the coming sessions. That said, the RSI hasn’t touched its 30 oversold level, and the MACD remains negatively charged below its red signal line, suggesting that downside risks are still intact.
The 1.0900 level is currently acting as resistance, while slightly higher, the 1.0950 area, which encapsulates the 20- and 50-day EMAs and the tentative descending trendline from July’s top, could be a bigger hurdle. A decisive close above the latter could battle the broken support trendline around the 1.1000 psychological mark, a break of which is required to boost buying confidence and lift the price straight to August’s high of 1.1064. Then the focus could turn to the 1.1100 mark.
A downside reversal could get congested somewhere between 1.0830 and 1.0800. The 200-day EMA could cement that floor. If the bears breach the latter too, the sell-off could exacerbate towards the 1.0730 constraining zone, while lower, the price may stabilize within the crucial 1.0680-1.0635 area.
In brief, EURUSD seems to be looking for a rebound, but the cloudy short-term outlook may not change unless the pair successfully returns above 1.1000.
