The EUR/USD pair dropped below the local low recorded on Mar. 23, 2020. As a result, the volume of short positions increased, thus pushing the price deeper to 1.0500. Since the beginning of the week, the euro has depreciated by about 300 pips.
The RSI technical indicator moves in the oversold area on the four-hour chart. The indicator hit a critical level of 19.65. Earlier, a touch of this level caused a corrective movement. On the four-hour and daily charts, Alligator’s moving averages are headed downwards, thus reflecting the existing trend.
On the daily chart, we see that the pair is hovering at the levels recorded in the spring of 2017. It is a signal that the pair is moving towards parity at 1.0000.
Outlook
The level of 1.0500 is acting as support. If the price touches this level, the volume of short positions may decrease. This, in turn, may lead to a technical rebound or a full-fledged correction. At the same time, traders’ speculative behavior may allow the pair to break the control level.
However, market players are likely to ignore an oversold signal. Thus, if the euro settles below 1.0500 on the four-hour chart, it may slide deeper to 1.0350. In terms of the complex indicator analysis, we see that technical indicators are signaling sell opportunities in the short-term, intraday, and mid-term periods amid the prolongation of the downtrend.
