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Technical Analysis – EURUSD gets bullish vibes after US CPI miss
August 10, 2023 3:27 pmVideo
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EURUSD advanced above a tough short-term resistance trendline in the four-hour chart and as high as 1.1064 after the US CPI figures showed a slightly weaker inflation than analysts expected.
The bounce in the price made a bullish inverse head and shoulders (H&S) pattern more clear in the chart, and the fact that the bullish structure is set up around the almost one-year-old support trendline is further boosting hopes for an upside trend reversal. The RSI and the MACD are adding to this optimism, as the indicators have strengthened significantly above their neutral levels.
A close above the 1.1040 neckline and the 38.2% Fibonacci retracement of the latest downleg at 1.1050 is now needed to complete the bullish formation and generate fresh buying interest towards the 50% Fibonacci mark and the 1.1100 round level. A successful battle there could intensify upside pressure to the 61.8% Fibonacci of 1.1135, while higher, the spotlight will shift to the 1.1200-1.1230 key constraining zone.
On the downside, the 1.1000 psychological level overlaps with the exponential moving averages (EMAs). Therefore, if the price slides lower, the area may attract immediate attention ahead of the strong support trendline at 1.0960. Interestingly, the falling constraining line from May’s peaks is reachable at 1.0935 and could cause some consolidation before the bears re-challenge the 1.0910 floor. Should the downtrend resume, the next pivot point could develop around 1.0875.
Summing up, EURUSD has put the downfall from mid-July into question as it completes an inverse head and shoulders formation. A confirmation is expected above 1.1050, whilst a slide below 1.0935 could signal a bearish continuation.
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