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EUR/USD - break or bounce

The world's largest single market - EUR/USD - is at an important level. There's potential for either a serious bounce or a damaging breakdown.

The chart shows EUR/USD just above important recent support at 1.1270 (black line). A drop through this level could bring a sharpish test of the 19 month low at 1.1215 (green line), and a break there would point to a new downtrend. The divergence of the RSI may favour this scenario - note the lower lows for the RSI (red line). However a break down from here would put the RSI into oversold territory. While history is not necessarily a predictor of the future, an oversold RSI has seen significant bounces over the last 6 months, and a bounce sceanrio can't be ruled out.

 


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