EUR/USD Resistance Rejection, What’s Next?

٣١ أغسطس

EURUSD Daily Chart
Current Price: 1.10470

The EURUSD pair has recently confirmed a Break of Structure (BOS) after breaching the neckline of the Head and Shoulders pattern, indicating a potential shift in market sentiment. Following its encounter with the Ultimate Resistance zone, the price is now retracing and appears poised to retest the neckline, a critical level before any potential continuation of the upward trend.

Murrey Math Lines (MML):
The price is currently positioned just below the 5/8 MML, which serves as the top of the current trading range. Our analysis suggests that the market may attempt to break below the 5/8 MML level. Should this occur, the next key level to watch is the 4/8 MML, which acts as a major support. The 4/8 level is historically significant, and we expect the market to respect this support level, likely leading to a rebound towards the 5/8 MML. However, if the market fails to hold above the 4/8 MML, a deeper retracement towards the neckline area is expected, aligning with the Fair Value Gap (FVG) and the 3/8 MML.

Price Consolidation:
A consolidation phase is anticipated between the 3/8 and 4/8 MML levels. This range-bound movement may serve as a crucial testing ground for future price action. If the price breaks below the 3/8 MML during this consolidation, the next downside target would likely be the Ultimate Support at 1.07422.

Channel Dynamics:
The pair recently tested the upper boundary of an ascending channel, which has served as a dynamic resistance. The subsequent movement towards the lower boundary suggests a potential test of this level. Given the current market conditions and momentum, it is probable that the price will break below this lower boundary to retest the neckline before deciding on its next significant move.

Indicators Overview:

Relative Strength Index (RSI):
The RSI currently stands at 53.07, reflecting a neutral stance. This indicates that the market is neither overbought nor oversold, leaving room for potential movement in either direction, depending on further price action.

Moving Average Convergence Divergence (MACD):
The MACD histogram is showing a slight bearish momentum with the MACD line at -0.0048 and the signal line at -0.00635. This bearish divergence suggests that the current downward movement might continue in the short term.

Volume:
The recent volume profile indicates a surge in trading activity, particularly as the price tested the upper boundary of the channel. This increase in volume could signify a stronger conviction in the current bearish retracement, potentially leading to further declines until the neckline or support levels are tested.

Key Resistance and Support Levels:

Resistance: 1.12305
Support: 1.10474, 1.09863, 1.09253, 1.08643, 1.07422

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Euro/Usd respected the 5/8 Level which is still strong support.