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EUR/USD Analysis: Double Bottom Breakout May Remain Elusive

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  • The EUR/USD pair looks set to test 1.1852 (double bottom neckline), the daily chart indicates.
  • However, a convincing double bottom breakout may remain elusive in short-run as the weekly chart is still biased to the bears, as indicated by moving averages.

The common currency rose to 1.1721 in Asia - the highest level since June 14 and will likely extend the recovery from the recent low of 1.1508 to 1.1852 (Dobule bottom neckline), the daily chart indicates.

Daily chart

eur_usd-636655903898588284.png

The bullish price-relative strength index (RSI) indicates the tide has turned in favor of the bulls for now. The spot has found acceptance above 50-candle moving average (MA) and 100-candle MA on 4-hour chart. The 200-candle MA has shed bearish bias (flatlined).

Meanwhile, the major MAs on the hourly chart - 50,100, and 200 - are trending north in favor of the bulls.

So, the currency pair looks set to test 1.1852 (ECB day high and also double bottom neckline).

A daily close above the neckline would confirm a bullish reversal - meaning the sell-off from 1.2414 has ended and the bulls have taken over.

However, a convincing double bottom breakout may not happen in the short-term as the 50-day moving average is still trending south and is currently located at 1.1839. Further, the 38.2 Fibonacci retracement hurdle of the April 17 high - June 21 low is located at 1.1854.

Also, the relative strength index (RSI) on the hourly and 4-hour chart is nearing the overbought territory (above 70.00).

Weekly chart

eur_usd_1-636655904162343337.png

Meanwhile, the 5-week, 10-week MA are trending south, indicating the primary trend is bearish. Currently, the 10-week MA is located at 1.1783. The RSI is hovering below 50.00 (into bearish territory).

Hence the bullish momentum is seen waning in the short-term and a convincing break above 1.1852 will likely remain elusive.

On the downside, a weekly close below the rising trendline (drawn from 2016 low and April 2017 low) would weaken the bull case and shift risk in favor of a drop to 1.198 (200-week MA).  

 

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Posted-In: FXStreetNews Eurozone Forex Markets

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