The sharp decline of the EURUSD pair from the major resistance level at 1.24105 halted after the pair hit the major support level at 1.13148. From that level, the bulls tried to rally higher but the major resistance level at 1.18110 refueled the bears and pushed the pair lower. The pair again tests the major support level at 1.13148 and formed a nice bullish engulfing pattern in the daily chart. The aggressive traders have already gone long in this pair with a tight stop beneath the low of 31st October 2018. However, the recent bearish pin bar formation at the minor support level at 1.14185 strongly suggest another retest of the major support level.
EURUSD technical chart analysis
Figure: EURUSD trading in a critical zone
From the above figure, you can clearly see the price has been stacked within two major support and resistance level. We need a strong fundamental news release which will act as a catalyst and break the consolidated price movement. A daily closing the price below the major support level at 1.13148 will bring back the sellers in the market. However, any bullish price action signal near the major support level will be an excellent opportunity to execute a long order with an initial target towards the minor resistance level of 1.14247. On the contrary, a clear break of the price above the minor resistance level of 1.14247 will confirm the potential double bottom formation at 1.13148.
In order to end the currency bearish rally of the EURUSD pair, the bulls will have a very tough time since the overall bias is strongly bearish. However, any extended rally needs an extensive correction. Though we have plenty of resistive candles just above the current price level the retail traders are expecting some bullish retracement from the EURUSD pair. A clear break of the critical resistance level of 1.15187 will eventually push the EURUSD pair towards the next major resistance level of 1.18110. This level is going to provide a significant amount of selling pressure to the EURUSD pair and any bearish price action confirmation signal will be an excellent opportunity to execute short orders. However, a daily closing of the price above the critical resistance level of 1.15187 will confirm the end of a long-term bearish trend.
On the downside, we need to clear the critical support level at 1.13117 to establish strong bearish momentum. A daily closing of the price below that support level will eventually lead this pair towards the next major support level of 1.11146. This level is going to provide significant support to the EURUSD bulls and any bullish price action confirmation signal will be an excellent opportunity to execute long orders.
The recent performance of the U.S economy is a little bit weak as the leading officials of the FED failed to come up with a solid statement regarding their next rate hike. According to the leading economist, there is a high chance we might see another rate hike from the FED to mitigate the current inflation rate problem. An imminent rate hike with dovish tone is not enough to push the U.S dollar index significantly higher in the global market. On the contrary, the ongoing crisis in the European economy is pushing the EURO lower against most of its major rivals. We need to see some strong fundamental news in favor of the European economy before you see a strong surge from the EURO bulls against its major rivals. So it’s better to wait for a fundamental news release to have a clear idea of the market trend.
Considering the technical and fundamental parameters, the overall bias for the EURUSD pair is slightly bearish. However, any bullish price action signal might give you a short-term profit taking the opportunity. The long-term traders are advised to stay in the sidelines until the market gives a clear direction in the bigger time frame.