EUR/USD Technical Analysis: Bulls Stalled at 1.1777 – Can Momentum Resume?
Original article by: Zhitong Finance, via Futu News
URL: https://news.futunn.com/en/post/61849189/eur-usd-technical-analysis-bulls-stalled-at-1-1777-can
The EUR/USD currency pair has recently displayed signs of bullish exhaustion after its rally towards the significant resistance level at 1.1777. While the broader trend suggests a still-favorable setup for the euro, multiple technical indicators suggest that further upward movement may be limited in the near term unless certain key levels are breached with volume-supported momentum.
This in-depth analysis explores the technical outlook for EUR/USD, assessing the recent price action, support and resistance levels, trend indicators, and possible scenarios for both bulls and bears over the coming sessions.
Overview of EUR/USD Price Movement
The EUR/USD pair climbed steadily throughout the recent sessions, supported by general weakness in the US Dollar (USD) and a pick-up in investor risk appetite across asset classes. The pair approached the 1.1770–1.1780 zone, which has historically acted as a congestion area. However, buyers failed to push through with conviction, and momentum eventually faded.
Technical Indicators Observations
A detailed look at the current state of the EUR/USD chart points to the following insights:
– The Relative Strength Index (RSI) on the daily chart sits slightly below the overbought threshold of 70, indicating that while prices have risen significantly, bullish exhaustion could set in.
– The 50-day simple moving average (SMA) has turned upward and is offering dynamic support near the 1.1650 level, as prices remain firmly above this line.
– The 200-day SMA lies well below current prices, signaling a broader long-term uptrend remains intact over the last several months.
– The recent price action forms a rising wedge pattern on shorter timeframes, a typically bearish setup unless invalidated by a strong breakout above resistance.
– Volume has decreased during the surge to 1.1777, suggesting the breakout attempt lacks conviction from broader market participants.
Resistance and Support Levels to Watch
Traders and analysts are closely monitoring key technical levels that will shape the next directional move in EUR/USD:
Key Resistance Zones:
– 1.1770–1.1780: This level proved itself once again as a strong resistance zone. It served as an upper limit in several previous attempts in the recent past.
– 1.1830: If bulls manage to close the pair above 1.1780 convincingly, the next potential resistance comes at 1.1830. This area acted as both resistance and support in past trading sessions and could pose a significant challenge.
– 1.1900: A psychological and technical barrier. It represents a round number and carries historical relevance from prior reversals during 2021 and early 2022.
Key Support Zones:
– 1.1700: Closest support as seen in recent pullbacks. A breach beneath this level could indicate waning bullish momentum.
– 1.1650: Aligns with the 50-day SMA, important for momentum traders watching for trend continuation.
– 1.1600: A longer-term support that could be tested in case of a significant sell-off. This level has been a multi-week pivot point and has confluence with prior demand zones.
Price Action Details and Pattern Formation
On closer inspection of the daily and four-hour charts, the EUR/USD appears to be forming a rising wedge pattern, commonly interpreted as a bearish development, especially when seen near a historical resistance zone like the one at 1.1777. The implications of this pattern are critical in shaping market expectations:
– The lower trendline of the wedge connects recent higher lows, showing slow but higher price advances.
– The upper trendline links highs near 1.1770, which the price has tested
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