- The downside will remain favored on the Inverted Flag chart formation.
- The RSI (14) needs to tumble below 40.00 to validate a bearish setup.
- A broader range consolidation indicates a firmer break on either side.
The EUR/USD pair has witnessed a minor rebound after printing a low of 1.0507 in the Asian session. The asset is oscillating in a broader range of 1.0483-1.0642 since April 28 after witnessing a sheer downside move from 1.0936 on April 21.
On a four-hour scale, the formation of an Inverted Flag is advocating more downside going forward. Usually, an Inverted Flag chart formation denotes the placement of offers by the initiative sellers. The initiative selling perspective signals the continuation of inventory distribution after a downside move.
The major is continuously sensing barricades from the 50-period Exponential Moving Average (EMA), which is trading at 1.0556. While the 100-EMA at 1.0615 is far above the asset price that adds to the downside filters.
The Relative Strength Index (RSI) (14) is oscillating back and forth in a 40.00-60.00 range, which signals a consolidation ahead.
Going forward, a drop below Friday’s low at 1.0483 will drag the asset towards the 29 December 2016 low at 1.0408, followed by the 20 December 2016 low at 1.0352.
Alternatively, violation of the previous week’s high of 1.0642 will send the asset towards the round level resistance at 1.0700. A breach of the latter will drive the asset further to April 19 low at 1.0761.
EUR/USD four-hour chart
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