Market Analysis – Price Slumps as EURUSD Fails To Hold Above 1.18400 Support Level
EURUSD fails to capitalize on its breakout from a descending wedge and price has now dropped back to the upper border of the wedge. The wedge was formed after EURUSD was rejected at 1.21460. Price dropped 2.50% in 3 days to 1.18400. Since then, the euro has been forging into a falling wedge. EURUSD tapered down the wedge for 28 trading days, before it pushed up out of the formation.
EURUSD Key Levels
Resistance Levels: 1.19100, 1.18400, 1.17560
Support Levels: 1.17100, 1.16550, 1.16200
The breakout lifted price above the 1.18400 key level, where the euro was expected to push up further. It, however, found resistance at 1.19100. This was supposed to be a temporal stop, but the weakness of EURUSD extended to 5 days. Price fails to hold this level and it eventually slumped in one day back to 1.17560 support. Today’s daily candle has fallen below the support and the upper border of the wedge, but with a rather miniature candle.
Price is currently trading around 1.17390 on a bearish candle. The RSI (Relative Strength Index) indicator shows that the point at which the market failed to hold was where it would have been propelled into the buying region, but failure to hold means EURUSD has fallen back into bears’ territory. On the Stochastic Oscillator, the euro has dipped from the entrance of the oversold region to the entrance of the overbought region. Bulls’ failure could lead to a bigger drop in price.
On the 4-hour chart, EURUSD has already fallen into the wedge formation but has jumped out immediately. The market is now sliding down the upper border of the wedge with 1.17560 failing to keep the price up. Both the Stochastic Oscillator and the RSI present price in the oversold region. The euro has now reached the tip of the falling wedge, which will present bears with a clear view of attacking the 1.17100 to go lower.
The fall in the market price could yet be a retest at the upper border before the market shoots up, but it is looking likely that the euro will drop below 1.17100 to 1.16550.
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