EURUSD eases below 38.2% Fibonacci; triple bottom formation in process
|EURUSD has been trading slightly lower over today’s trading session, after the pullback on the 20-day simple moving average (SMA) in the near-term. After the aggressive buying interest in the previous two days, the price is in the process of forming a triple bottom pattern with significant support the 1.1530 barrier and with neckline the 1.1840 resistance level.
Technically, in the daily timeframe, the momentum indicators seem to be in confusion for the next price movement. The RSI indicator is sloping downwards near its neutral threshold of 50, while the MACD oscillator is strengthening its positive momentum in the negative territory. Moreover, the %K line of the stochastic oscillator posted a bullish cross with the %D line in the neutral area.
In case of further gains and a jump above the 20-SMA of 1.1670 and the 38.2% Fibonacci retracement level of the upleg from 1.0340 to 1.2550, around 1.1710, as well as surpass the 40-SMA of 1.1715 at the time of writing, there is scope to test the aforementioned neckline of 1.1840. This is considered to be a strong resistance area which has been rejected a few times in the past. Moving above this barrier would see a completion of the pattern and would drive the price towards the 1.2000 psychological hurdle, which overlaps with the 200-day SMA.
Conversely, the next strong support to have in mind is the 1.1510 – 1.1530 area. If this support hurdle fails, then the focus would shift to the downside towards the 50.0% Fibonacci region of 1.1450. A break of this barrier would increase bearish pressure and bring about a resumption of the negative mode. From here, EURUSD would be on the path towards the 1.1300 handle.
To sum up, the world’s most traded currency has been developing within a reversal pattern (triple bottom). Near-term weakness is expected to remain as long as price action takes place above 1.1530 and below the neckline (1.1840).
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