EUR/USD traded lower during the European morning Thursday, after it hit resistance at 1.2385. Now, the rate looks ready to challenge the 1.2345 support barrier. The pair continues to trade above the longer-term uptrend line drawn from the low of the 10th of April and thus, we believe that the broader trend remains positive. That said, in the short run, EUR/USD is trading below the downside resistance line taken from the peak of the 16th of February, which make us believe that it is experiencing a corrective phase for now.
If the bears are strong enough to overcome the 1.2345 support level, then we may see them aiming for our next support of 1.2315. Another break below the latter level could open the way for the 1.2290 hurdle.
Our short-term oscillators support the case for further declines in the short term. The RSI slid after hitting resistance near 70 and just touched its toe below 50, while the MACD, although positive, lies below its trigger line, near zero. It could obtain a negative sign soon.
On the upside, a break above the aforementioned short-term downside resistance line, followed by a move above 1.2415 could make us abandon the bearish case and take the sidelines. Such a move could aim for the 1.2445 resistance, defined by the peaks of the 7th and 8th of March. That said, a decisive close above 1.2445 is needed before we start examining the case for a resumption of the prevailing longer-term term uptrend.
Article written by Charalambos Pissouros, Senior Market Analyst at JFD Brokers