- EURUSD continues to hover around the 1.0720-1.0727 area
- Short-term bearish trend remains firmly in place
- But the stochastic oscillator could open the door to a bullish move
EURUSD continues to hover around the 1.0720-1.0727 area as market participants are preparing for the next key events. All eyes are on the stochastic oscillator at this juncture. It is hovering in its oversold territory, but it has surpassed its moving average and looks ready to climb above the 20 threshold and the August 31 local peak. This could be the signal the bulls have been waiting for to stage a proper rebound and test the July 17, 2023 trendline.
The remaining momentum indicators are still on the bears’ side. More specifically, the Average Directional Movement Index (ADX) is edging lower and towards its 25-threshold, thus pointing to a weakening bearish trend in EURUSD. More significantly, the RSI confirms the bearish tendency present in this market as it has been trading below its 50-midpoint since late-July.
Should the bulls decide to stage a rebound, they could try to overcome the July 17, 2023 downward sloping trendline and then test the resistance set by the 50-, 100- & 200-day simple moving averages (SMAs) in the 1.0827-1.0937 area. Even higher, they could come up against the more important 1.1032-1.1095 range, which is defined by the February 2, 2023 and April 26, 2023 highs respectively.
On the flip side, the bears could take advantage of any short-term upleg and then try to break the busy 1.0720-1.0727 area, which is populated by the December 15, 2022 high and the 23.6% Fibonacci retracement of the September 28, 2022 – April 26, 2023 uptrend respectively. Lower, they could have a look at making a new 2023 low, provided they cross the important 1.0481-1.0571 region.
To conclude, market participants remain on the sidelines ahead of the next key events with the bulls anxiously trying to stage a small rally if the stochastic oscillator provides the appropriate signal.