Original Source: Greg Michalowski, InvestingLive.com
Link: https://investinglive.com/technical-analysis/eurusd-moves-to-new-session-lows-20220607/
Title: EUR/USD Weakens to New Session Lows: A Detailed Technical Analysis
On June 7, 2022, EUR/USD broke to new session lows, signaling bearish momentum in the currency pair. The pair failed to maintain early bullish price action and gradually declined as sellers increasingly took control. In this article, we break down the technical levels that influenced the pair’s movement and identify areas of interest traders should monitor going forward.
Overview of the Recent EUR/USD Price Action
– The EUR/USD pair drifted lower during the trading session on June 7, creating fresh session lows and undermining the support previously seen during the Europe and early U.S. sessions.
– At one point, the pair had attempted to rally on the back of improving risk sentiment, but those gains were short-lived as sellers reasserted themselves with stronger momentum.
– This move reversed intraday strength and pushed the price into important technical zones that could determine near-term direction.
– The action came amid a broader move seen across multiple currency pairs, where the U.S. dollar started gaining strength near key resistance areas.
Key Technical Levels and Their Significance
Understanding the technical landscape is essential for traders looking to capitalize on movements in EUR/USD. The June 7 session highlighted several notable technical features that traders need to keep in mind:
– The 100-hour Moving Average (MA) served as a ceiling for the pair during earlier trading hours. Attempts to break above this level were met with resistance.
– The inability to push through the 100-hour MA suggested weakening bullish momentum and opened the door for a pullback.
– A declining trend line also acted as resistance near the 100-hour MA, reinforcing the rejection zone around that level.
– Failure to move above both the trend line and the 100-hour MA confirmed that buyers lacked conviction, allowing sellers to re-enter the market.
Break Below 200-Hour MA Triggers Bearish Momentum
– As the day progressed, the price started to slip toward and through the 200-hour MA, initiating a more aggressive sell-off.
– The 200-hour MA had previously acted as a clear demarcation line for near-term directional bias. A break below this moving average typically signals a shift in control from buyers to sellers.
– Once this level gave way, momentum intensified, pushing the currency pair to session lows and testing deeper support levels.
Support and Resistance Zones to Watch
Looking at the EUR/USD chart, several important support and resistance zones came into focus during the technical breakdown.
Support Levels:
– Initial minor support appeared near the 1.0675 area. While the price paused temporarily at this level, it could not muster a sustained bounce.
– Deeper support was found at 1.0650, a level seen as a minor pivot point on prior charts. Still, the bearish tone remained intact below this level.
– Should the selling pressure persist, the next logical support comes in at 1.0630 followed by 1.0600, which coincides with swing lows made during late May.
Resistance Levels:
– Should the pair attempt a rebound, the first hurdle would be climbing back above the 200-hour MA, which now turns into resistance.
– Further up, the confluence zone made up of the 100-hour MA and the descending trend line near 1.0710–1.0720 becomes a critical barrier.
– A move above this zone would challenge the medium-term bearish bias and could open a pathway for a return towards 1.0750.
MACD and Momentum Indicators Outline Bearish Signals
Technical momentum indicators also reinforced the bearish price action seen during the June 7 session.
– The Moving Average Convergence Divergence (MACD) turned lower, with the histogram extending into negative territory.
– This shift pointed to
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