Bulls need to defend key support this week: EUR/USD analysis
EUR/USD analysis highlights the technical importance of the 1.1080 to 1.1090 area this week. Losses below the mentioned technical region could trigger a 400 point decline.
Last week the EUR/USD incurred its most volatile trading week since the November 2016 US election, with the pair trading in a weekly price range of nearly 500 points.
EUR/USD technical analysis shows that bulls need to defend the 1.1085 level to keep the recent bullish momentum in the pair alive.
EUR/USD medium-term price trend
The EUR/USD suffered wild price swings last week, as central bank policy action and fears over the coronavirus caused the pair to trade between the 1.1500 to 1.1050 price range.
The week ahead could be just as volatile for the EUR/USD, as news surrounding the coronavirus continues to hit the headlines, while the FOMC has already cut interest rates.
EUR/USD analysis over the medium term shows that bulls must continue to defend the 1.1085 support level to avoid a steep technical sell-off.
Last week's reversal from the 1.1500 level provoked a technical test of a large falling wedge pattern on the daily time frame.
Bulls successfully defended key trendline support, and the EUR/USD pair bounced, aided by the news that the New York FED was providing a massive liquidity package.
Continued defence of the wedge should continue to provoke bounces in the EUR/USD pair back towards the 1.1200 level. However, a loss of the 1.1085 level could cause a sharp decline.
Traders should note that the EUR/USD remains technically bearish over the medium term while the price trades below 1.1185.
Key medium-term resistance is found at the 1.1350, 1.1500 and 1.1600 levels, while key support is found at the 1.0920 and 1.0840 levels.
EUR/USD short-term price trend
EUR/USD technical analysis shows that the pair is only technically bearish over the short term while the price trades below the 1.1010 level.
The 1.1000 area has long been an important technical region for the EUR/USD pair, and a key psychological pivot for traders.
EUR to USD analysis shows that a bearish head-and-shoulders pattern has formed across the lower time frames, following last week's wild price movements.
A head-and-shoulders pattern has over 400 points of downside potential, which should concern short-term bears.
Short-term traders should be mindful that the neckline of the bearish pattern is located around the 1.1090 level.
EUR/USD technical summary
EUR to USD analysis shows that the pair could come under downside pressure if the price starts to weaken below the 1.1080 to 1.1090 technical region. The next major directional trend could form this week.