Technical Analysis – EURUSD gets bearish vibes; 200-EMA in focus
June 29, 2023 2:28 pm
EURUSD remained negatively charged for the second consecutive day on Thursday despite flash German CPI figures arriving slightly higher than analysts anticipated.
In the four-hour chart, the pair could not find enough buyers to climb above its 20- and 50-period exponential moving averages (EMAs), reversing south instead to test the 23.6% Fibonacci retracement of the latest upleg at 1.0867. Strikingly, the 200-period EMA, which has been adding a strong footing under the price since mid-June, is within breathing distance at 1.0860.
Yet, the worsened market structure, which has the form of a head and shoulders pattern (H&S) in the very short-term picture, is raising the risk of a bearish continuation below 1.0860. Of course, the stochastic oscillator is signaling oversold conditions, flagging a potential rebound, but the falling RSI and the weakness in the MACD cannot verify the case.
The neckline could be around the swing low of 1.0843. A clear move below that threshold could initially take a breather around the 50% Fibonacci mark of 1.0820 before accelerating towards the 61.8% Fibonacci of 1.0778. It’s worthy to note that the tentative ascending line, which connects the lows from September and May, is within the same neighborhood.
In the positive scenario, where the price pivots immediately near its 200-period EMA, the bulls may try to enter the 1.0900 region above the 20- and 50-period EMAs. The 23.6% Fibonacci mark could make the battle more challenging, along with the 1.0940 resistance. If upside forces dominate, the spotlight will shift straight to the September ascending line around 1.0975, which the bulls could not successfully breach last week. The tentative descending line from May is slightly above it at 1.1000.
Summing up, EURUSD seems to be preparing for its next bearish phase after peaking around 1.1000 last week. That said, traders might wait for a confirmation below 1.0860 before reducing their exposure in the market.
EURUSD remained negatively charged for the second consecutive day on Thursday despite flash German CPI figures arriving slightly higher than analysts anticipated.
In the four-hour chart, the pair could not find enough buyers to climb above its 20- and 50-period exponential moving averages (EMAs), reversing south instead to test the 23.6% Fibonacci retracement of the latest upleg at 1.0867. Strikingly, the 200-period EMA, which has been adding a strong footing under the price since mid-June, is within breathing distance at 1.0860.
Yet, the worsened market structure, which has the form of a head and shoulders pattern (H&S) in the very short-term picture, is raising the risk of a bearish continuation below 1.0860. Of course, the stochastic oscillator is signaling oversold conditions, flagging a potential rebound, but the falling RSI and the weakness in the MACD cannot verify the case.
The neckline could be around the swing low of 1.0843. A clear move below that threshold could initially take a breather around the 50% Fibonacci mark of 1.0820 before accelerating towards the 61.8% Fibonacci of 1.0778. It’s worthy to note that the tentative ascending line, which connects the lows from September and May, is within the same neighborhood.
In the positive scenario, where the price pivots immediately near its 200-period EMA, the bulls may try to enter the 1.0900 region above the 20- and 50-period EMAs. The 23.6% Fibonacci mark could make the battle more challenging, along with the 1.0940 resistance. If upside forces dominate, the spotlight will shift straight to the September ascending line around 1.0975, which the bulls could not successfully breach last week. The tentative descending line from May is slightly above it at 1.1000.
Summing up, EURUSD seems to be preparing for its next bearish phase after peaking around 1.1000 last week. That said, traders might wait for a confirmation below 1.0860 before reducing their exposure in the market.
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