Chart Overview
Euro FX Futures (6E) remain under pressure as the Dollar continues to rise. The Euro has been held at the support zone at 1.063 after the Trump victory rally of DXY. Weak momentum, confirmed by a declining RSI, raises the likelihood of further downside if bulls cannot push prices back into the prior range. Let’s assess what has happened and outline potential scenarios.
Technical Analysis
Support Zone Holding Firm at 1.0630
- Price has tested the 1.0630 support zone multiple times, but buyers continue to defend this level successfully.
- A weekly close above 1.0630 would signal that bulls are still in control of this range, potentially pushing for a bounce higher.
Resistance Zone at 1.10265
- The 1.10265 resistance zone remains a strong ceiling, marking the upper boundary of the recent trading range. Bulls will need to reclaim this area to shift momentum decisively higher, something difficult to do now as the DXY continues to rally after the Trump victory.
RSI Suggesting Neutral to Bearish Conditions
- The RSI (14) is currently at 36.93, showing weak momentum but not yet oversold. This suggests there is still room for price stabilization or a potential relief bounce.
Range-Bound Behavior
- Price action over the past year has been confined within a clear range between 1.0630 (support) and 1.10265 (resistance). Until a breakout occurs in either direction, the market will likely remain range-bound.
Bullish Case 📈
- Support at 1.0630 Holding: As long as the euro holds above the 1.0630 zone, bulls have a chance to stage a recovery toward the top of the range at 1.10.
- Oversold Conditions Approaching: RSI near 37 hints that selling pressure may be exhausted, increasing the likelihood of a bounce.
- Reversal Potential: A bullish signal or candlestick pattern (e.g., a weekly hammer or bullish engulfing) around 1.0630 could confirm that buyers are stepping in.
Bearish Considerations ⚠️
- Break Below 1.0630: A weekly close below the 1.0630 support zone would confirm a breakdown, triggering further downside toward 1.0300 and potentially 1.0000.
- Weak Momentum: The declining RSI and overall trend still lean bearish, keeping the risk of a breakdown on the table if bulls fail to defend support.
Potential Scenarios
Scenario 1 – Bounce Off Support
- Key Level: A sustained hold above 1.0630 could trigger a relief rally toward the 1.10 resistance zone.
- Confirmation: Watch for bullish candlestick patterns and increasing volume.
Scenario 2 – Breakdown Below 1.0630
- Key Level: A decisive close below 1.0630 opens the door for a drop to 1.0300 (intermediate support) and potentially 1.0000.
- Confirmation: Bearish momentum increasing on the weekly close, with RSI falling further.
Trade Ideas 💡
Long Setup – Support Bounce
- Entry: Buy near 1.0630 with a bullish reversal signal.
- Target 1: 1.0800 (short-term resistance).
- Target 2: 1.10265 (major resistance).
- Stop Loss: Below 1.0580.
Short Setup – Support Breakdown
- Entry: Sell on a confirmed close below 1.0630.
- Target 1: 1.0300 (intermediate support).
- Target 2: 1.0000 (psychological level).
- Stop Loss: Above 1.0700 (false breakdown protection).
Outlook & Summary
- Short-term (1-2 weeks): Expect a battle around the 1.0630 support zone. Bulls need to defend this level to avoid a breakdown; otherwise, sellers will target 1.0300.
- Medium-term (1-3 months): A hold at support could lead to a bounce toward 1.10. However, a breakdown below 1.0630 would shift momentum firmly bearish.
- Long-term (3+ months): If support holds, range-bound behavior between 1.0630 and 1.10265 will likely persist into early 2025.
