EUR/USD Price Analysis: Inverted hammer hints at corrective bounce

EUR/USD could be in for a corrective bounce, having printed an inverted hammer on Friday.
Friday's inverted hammer is backed by an oversold reading on a key daily chart indicator.

Omkar Godbole FXStreet Contributor

EUR/USD produced an inverted hammer candle on Friday, confirming the below-30 or oversold readings on the 14-day relative strength index (RSI) and opening the doors for a corrective bounce.

An inverted hammer comprises long upper shadow, small body and little or no lower wick. The pattern typically appears after a prolonged downtrend, as is the case here, and indicates the buyers are beginning to test sellers' resolve to keep the rate lower - an early sign of bullish reversal.

Alongside that, the hourly chart RSI is reporting a bullish divergence.

The pair may rise to the descending 5-day average at 1.0858, above which the next resistance is located at 1.0917 (10-day average).

The inverted hammer would be invalidated if the pair finds acceptance under 1.0827. That would bring in additional losses to 1.08. The spot is currently trading at 1.0836.

Daily chart

Trend: Corrective bounce likely

Technical levels

EUR/USD

Overview
Today last price	1.0836
Today Daily Change	-0.0001
Today Daily Change %	-0.01
Today daily open	1.0837

Trends
Daily SMA20	1.0997
Daily SMA50	1.1079
Daily SMA100	1.1066
Daily SMA200	1.1115

Levels
Previous Daily High	1.0861
Previous Daily Low	1.0827
Previous Weekly High	1.0958
Previous Weekly Low	1.0827
Previous Monthly High	1.1225
Previous Monthly Low	1.0992
Daily Fibonacci 38.2%	1.084
Daily Fibonacci 61.8%	1.0848
Daily Pivot Point S1	1.0823
Daily Pivot Point S2	1.0808
Daily Pivot Point S3	1.0789
Daily Pivot Point R1	1.0857
Daily Pivot Point R2	1.0876
Daily Pivot Point R3	1.0891

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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