EURUSD faces resistance around 1.2250/60 zone

Technical Analysis:

EURUSD had raised through 1.2345 highs over the last week before reversing lower towards 1.2170 mark on Friday. Bears might remain poised to take control back from here and drag prices lower towards 1.1986 levels soon.

EURUSD structure still remains constructive to resume trend lower towards 1.1300 and beyond, since the rally between 1.1704 and now seems corrective a-b-c as shown on the daily chart. Wave a had unfolded as an impulse, b had terminated around 1.1986 while wave c might be unfolding as an ending diagonal.

The proposed ending diagonal either terminated at 1.2245 levels over the last week with the last wave being a truncation; or it could terminate over this week with yet another high above 1.2245 levels respectively.

A break below 1.1986 will confirm that the diagonal structure is complete and that EURUSD is turning lower again. If the above structure is correct, EURUSD might be dropping towards 1.1300 and further, over the next several weeks.

Alternately, if prices break above 1.2350 levels, the above bearish structure would be considered void and bulls could push higher towards 1.2500 levels, going forward. Probabilities remain high for a bearish resumption from here though.

Watch out for a potential test of 1.2245 levels as the week progresses, before EURUSD bears are back with vengeance. Also if 1.1986 breaks from here, it would confirm that a meaningful top is in place already.

Prepared by

Finacademy Technical Team