EURUSD Bearish Bias

EURUSD Chart
.25 Mar 2024
author avatar image Andreas Thalassinos

Table of Contents

Briefing on EURUSD

  • Financial instrument: EURUSD 
  • Timeframe: Daily
  • Session: Tokyo
  • Trend: Down
  • Trend Confirmation: Exponential Moving Average(EMA), Relative Strength Index(RSI), Moving Average Convergence/Divergence(MACD), Middle Bollinger Band
  • Momentum: MACD Signal
  • Support Levels: 1.08618, 1.07989, 1.07595, 1.06945
  • Resistance Levels: 1.08510, 1.09007, 1.09811, 1.10413
  • Trading Strategy: Sell on rallies, Buy on reversal

High Impact Economic Events

  • Tuesday, March 25, 02:00 pm (GMT+0), USD: CB Consumer Confidence 
  • Wednesday, March 26, 12:30 am (GMT+0), AUD: Consumer Price Index y/y 
  • Thursday, March 27, 12:30 pm (GMT+0), CAD: Gross Domestic Product m/m 
  • Thursday, March 27, 12:00 pm (GMT+0), USD: Final GDP q/q 
  • Thursday, March 27, 12:30 pm (GMT+0), USD: Unemployment Claims 
  • Thursday, March 27, 02:00 pm (GMT+0), USD: Pending Home Sales m/m 
  • Thursday, March 27, 02:00 pm (GMT), USD: Revised UoM Consumer Sentiment 
  • Friday, March 28, 12:30 pm (GMT), USD: Core PCE Price Index m/m 

Trend Analysis for EURUSD

EURUSD Image

Over the past days and weeks, EURUSD has exhibited a predominantly bearish trend, with lower highs and lower lows on the daily timeframe. This downward movement suggests that sellers have dominated the market, exerting pressure on the Euro relative to the US Dollar. Although, undoubtedly, price is the most important tool in a technical analyst’s “toolbox,” statistical tools such as indicators and oscillators may provide helpful insights to decipher the market’s psychology.

Indicators and Oscillators Analysis

The Relative Strength Index (RSI) is currently below the 50-baseline, hovering around oversold territory, indicating that the pair may be due to a potential reversal or temporary bounce from the current support zone. However, traders should exercise caution, as RSI alone may not be a reliable indicator. Additionally, the Bollinger Bands suggest a widening volatility, with the lower band acting as a dynamic support.

The Exponential Moving Average and the Moving Average Convergence/Divergence (MACD) confirm the downward movement. In particular, prices are trading below the Moving Average line, and MACD fell below the baseline.

Additionally, the MACD oscillator indicates a bearish momentum, with the signal line consistently below the MACD line. 

Key Support Levels for EURUSD

The EURUSD pair is currently keeping a watchful eye on a critical support level located at 1.07989 after breaking through the technical support zone of 1.08618. If this next level is breached, it may indicate further potential for a downturn, with the next significant support levels being observed around 1.07595 and 1.06945.

S1–>1.08618 breached

S2–>1.07989

S3–>1.07595

S4–>1.06945

Key Resistance Levels for EURUSD

Should the bulls gain control of the market, we anticipate the possibility of achieving gains in the future, although potential resistance is expected to arise at several levels. The initial resistance level is estimated to be around 1.08510. Thereafter, we project that resistance will be seen at 1.09007, 1.09811, and 1.10413, respectively.

R1–> 1.08510

R2–>1.09007

R3–>1.09811

R4–>1.10413

Trading Strategy for EURUSD

Based on the technical analysis, conservative traders may consider waiting for confirmation of a bullish reversal pattern, such as a double bottom, bullish engulfing candlestick, or a break above the immediate resistance level, before considering long positions. On the other hand, aggressive traders may explore short-term selling opportunities on rallies towards resistance levels, with tight stop-loss orders to manage risk effectively. Additionally, if the negative momentum persists and candlesticks close below the Lower Bollinger Band, indicating a continuation of the downtrend, then traders may take advantage of the falling exchange rates with short positions.

Summary

In conclusion, the technical analysis of EURUSD suggests a bearish bias in the short term, with the pair testing critical support levels. Traders should closely monitor price action around key support and resistance zones, along with relevant technical indicators, to identify potential trading opportunities and manage risk effectively in the current market environment. 

author avatar image
Andreas Thalassinos

Experienced educator with a demonstrated history of working in the financial services industry. Skilled in Technical Analysis, Market Risk, Asset Management, Stock Market, and Trading Systems. Strong professional with a MSTA by Society of Technical Analysts (UK), CFTe and MFTA focused in Master of Financial Technical Analysis from International Federation of Technical Analysts (USA).