February 4, 2023

Bears eye 1.10 the figure for the start of the year

  • EUR/USD bears eye a run towards the imbalance of price all the way down to 1.10 the figure. 
  • For the meanwhile, the dynamic support is holding up the bears.

EUR/USD has been in a long-term downtrend since the middle of 2021. For the weeks ahead, there is a bias towards 1.10 and the following illustrates this in a top-down analysis.

The weekly chart has made a significant retracement to test the vicinity of 50% mean reversion. This leaves the focus on the downside in accordance with the dominant bearish trend.

EUR/USD weekly chart

However, there is still an imbalance of price that could yet be mitigated prior to further downside.

EUR/USD daily charts

Should the bulls break the resistance on the daily chart, then there will be prospects of a continuation to mitigate some of, if not all of, the imbalance of price as illustrated above.

On the other hand, considering the bearish trend, a break of both horizontal and dynamic support would reveal the downside imbalance as follows:

In any case, both areas of imbalance will be filled eventually:

The higher probability is to trade with the trend. In the above scenario, a bearish breakout of the dynamic support opens risk towards 1.10 the figure for the weeks ahead. 

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