TECHNICAL ANALYSIS
On the Daily timeframe, it's evident that the EURUSD pair encountered a well-defined rejection at a significant resistance point near the 1.0620 level. This rejection was particularly notable due to the confluence of the resistance with a trendline and the 38.2% Fibonacci retracement level. Sellers entered the market with a clear risk management strategy, keeping their stop-loss orders above the trendline, positioning themselves for a potential breakdown below the key support at 1.05, with a subsequent target around the 1.02 level. A recent bounce from the support level suggests that some late sellers may look to join the trend during this pullback. However, on the 4-hour chart, it's apparent that the last downward movement toward the 1.05 support was accompanied by a divergence with the MACD, which often indicates a weakening of momentum, potentially leading to pullbacks or reversals. In this context, the pullback into the trendline suggests a resumption of the downtrend. The price is currently experiencing resistance at the red 21-day moving average as sellers begin to enter the market with a well-defined risk strategy, placing stop-loss orders above the last swing high in anticipation of a move toward new lows. To shift the bias from bearish to bullish, buyers will need the price to breach the trendline and start aiming for new higher highs. Examining the 1-hour chart, we observe another recent divergence, leading to a pullback around the 1.0550 level. Sellers seized the opportunity, using the resistance as a pivot point with a narrow risk margin above this level, creating an attractive risk-to-reward setup. A break below the counter-trendline would serve as confirmation that the bearish momentum is robust, likely attracting more sellers aiming for new lows.
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