EURUSD Analysis – Price Is Looking to Bounce Off the 1.12020 Significant Level
EURUSD is looking to bounce back from a dip in price. The market breaks through the neckline of a double top formation and plunges beyond several significant levels to reach the 1.12020 support level. There was hesitation in the market at the neckline before it broke through as EURUSD faced resistance going downward. A retest of the 1.19030 price level empowered the market to drill through it eventually.
EURUSD Significant Levels
Resistance Levels: 1.22620, 1.19030
Support Levels: 1.12020, 1.17130
Interestingly, the formation of the downtrend double top pattern started at 1.12020. From the level, the price accelerated and climbed directly above 1.17130. A period of consolidation kicked in, after which the market broke through the upper border at 1.09030 to reach 1.22620. It was at this point that bears gained the upper hand and dragged the market down to the next line. Bulls were looking to bounce back and they made it happen at the neckline to reach back to 1.22620.
Another price decline happened at the 1.22620 resistance, which led to another consolidation movement above the 1.17130. The market plunged after some months and a further retest of the 1.17130 level led to a direct drop to 1.12020. The market is rallying above the 1.12020 support now and the Parabolic SAR (Stop and Reverse) has switched its dots below the daily candles to show upward movements. The ATR (Average True Range) indicator shows increasing market volatility for the past 6 weeks.
Market Prospects
The 4-hour chart shows that the price dropped out of its descending channel. However, at the 1.12020 support, bulls forged a double bottom formation to lift the market back into the channel. A retest of the channel’s lower border pushed it even higher until it was strongly rejected at 1.13840. Market volatility is on the decline again after an initial increase, as shown by the ATR. The Parabolic SAR also suggests a market decline.
EURUSD will be looking to bounce off the lower border of the channel again to test the 1.13840 level again.
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