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EUR/USD reaches 1.0500

IronFX UUIIFXBR
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EURUSD continued its tumble on Wednesday and today. During the Asian morning it hit support near the psychological barrier on 1.0500 (S1). The short-term bias stays negative and I would expect a clear move below 1.0500 (S1) to set the stage for extensions towards 1.0360 (S2), defined by the low of the 8th of January 2003. The RSI, already below 30, turned again south, while the MACD continued deeper into its negative territory, also below its trigger line. These momentum signs show strong downside speed and amplify the case for further declines. However, zooming on the 1-hour chart, there is positive divergence between both our hourly momentum studies and the price action, thus I would be careful that a minor bounce could be looming before the next leg down. With regards to the broader trend, I believe that the pair is still in a downtrend. EURUSD is printing lower peaks and lower troughs below both the 50- and the 200-day moving averages.

• Support: 1.0500 (S1), 1.0360 (S2), 1.0185 (S3).

• Resistance: 1.0565 (R1), 1.0665 (R2), 1.0800 (R3).

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