EUR/USD Near Key Resistance!

EUR/USD is traded at 1.1271 level, but it seems undecided after another false breakout above the near-term resistance level. The pair is trapped between two important levels, so we have to have to wait for a valid breakout.

Yesterday‘s USDX’s rebound has forced EUR/USD to drop again, the dollar was boosted by the US Retail Sales and Core Retail Sales data. Surprisingly or not, the Retail Sales indicator has increased by 17.7% in May, beating the 7.9% estimate, while the Core Retail Sales has registered a 12.4% growth, versus the 5.5% consensus.

Unfortunately, the US Industrial Production increased only by 1.4%, less compared to the 3.0% estimate, but the USD is struggling to stay higher versus its rivals in the short term.

It is very important to see what will really happen on the USDX, the index is traded at 96.98 level, a valid breakout above the S1 (97.36) level will confirm a further increase towards the upper median line (UML) of the descending pitchfork and will force the EUR/USD to resume the bearish movement.

A USDXs drop back to 96.00 psychological level, or even lower, will push EUR/USD towards fresh new highs in the upcoming period. Technically, the US Dollar Index seems strong enough to climb higher after the false breakdown below the 96.00 level and after the price has developed and confirmed a bullish engulfing pattern. You should know that the USDX is still under pressure as long as it stays below the upper median line (UML), so only a valid breakout from this descending pitchfork will announce a broader leg higher and the EUR/USD massive drop.

EUR/USD has failed once again to stabilize above the upper median line (UML) of the descending pitchfork signaling am exhaustion in the short term. A valid breakdown below the R1 (1.1243) and below the 1.1240, another lower low, will validate a further drop on the Daily chart. The next downside target is seen at the 1.1 psychological level, EUR/USD could approach this major support only if the USDX will resume its rebound.

The pair will confirm a further upside movement only if the price will make a valid breakout above the upper median line (UML) and most important above the R2 (1.1383) level. EUR/USD moves sideways between the R1 (1.1243) and R2 (1.1383) levels, it remains to see if this will be an accumulation or a distribution, a valid breakout from this range will give us a clear direction in the short term.

An upside breakout will signal a bullish momentum towards the R3 (1.1622) level, while a downside breakout will suggest selling, the PP (1.1005) could be used as a target.

EUR/USD is developing a Head&Shoulder pattern on the H4 chart, another lower low, a drop below the 1.1212 could confirm this reversal pattern and a potential further drop in the short term. You can see that the pair has failed to reach and retest the R2 (1.1383) again signaling that the bears are strong in the short term.

If the H&S pattern will be confirmed, EUR/USD could register a 200 pips drop, towards the 1.1000 psychological level. The R1 (1.1243) - 1.1240 area represents a strong downside obstacle, so we have to wait for a valid breakdown before well consider going short.

A potential drop will be invalidated if the EUR/USD will climb above the 1.1353 high and if it will make a valid breakout above the R2 (1.1383) level.

Olimpiu Tuns

Olimpiu Tuns is a seasoned market analyst / trader / trainer on the financial markets with expertise in forex, cryptocurrencies, commodities, futures, options, index, CFD for more than 8 years. He is also a famous blogger in both technical and fundamental analysis, trading signals, trade setups, etc.

He has worked as a Market Analyst / Consultant for three major Brokerage companies, Admiral Markets, MultiBank Exchange Group and InstaForex (live webinars, market analysis, educational materials, video analysis, video tutorials, ghostwriting, content creator), as a Social Media Manager and as a Financial Markets & Crypto Analyst / Contributor for very important news portals/blogs (investing.com, benzinga.com, forexalchemy.com actionforex.com, countingpips.com), websites, educational platforms (Forex.Academy, Forex.Today), independent clients, etc.

Olimpiu Tuns currently works as a Financial Markets & Crypto Analyst / Signal Provider / Trader / Trainer.

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