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Chart of the week – EUR/USD potential bullish signals detected at range support

Chart of the week – EUR/USD 

EUR/USD potential bullish signals detected at range support

Short-term technical analysis

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Time stamped: 17 Jul 2021 at 1:00pm SGT

Source: CMC Markets

  • The recent -203 pips decline seen in the EUR/USD from its 25 June high of 1.1975 to 14 July low of 1.1772 has reached the lower boundary of a 7-month “Symmetrical Triangle” range configuration in place since 6 January 2021.
  • In conjunction, bullish signals have been detected as well; the on-going decline from the 25 June minor high of 1.1975 has evolved into a potential minor bullish reversal “Descending Wedge” configuration coupled with a bullish divergence signal seen on the 4-hour Relative Strength Index (RSI) at its oversold region. These observations suggest that recent downside momentum of price action has started to wane which advocates a potential recovery in EUR/USD at least in the short-term horizon.
  • Watch the 1.1770 key short-term pivotal support and a break above 1.1850 intermediate resistance (upper boundary of the minor “Descending Wedge”) may trigger a short-term push up towards the next resistances at 1.1990 and 1.2110.
  • On the flipside, a 4-hour close below 1.1770 invalidates the short-term push up scenario for a continuation of the two-month decline since 25 May high to retest the 31 March swing low of 1.1710 and below it opens up scope for a further down move towards 1.1610 (4 November 2020 medium-term swing low).