FX.co ★ Major bearish divergence in EURUSD.

EURUSD made new lower lows at 1.1107 yesterday. Today price is above 1.12 and the RSI has provided us with another bullish divergence as it did not make new lower lows. This is not a reversal signal but a sign that the downtrend is weakening. Bears should be cautious.

Black lines- Fibonacci retracements

If EURUSD bulls manage to recapture 1.1390-1.1410 area, we should expect a major reversal to the upside. There are increased chances that a major low is in the process of being realized at current levels. EURUSD has the potential to turn higher from current levels and start a new upward move at least towards 1.17-1.18. So far we have indications that the downward pressures are weakening. Trading around the 61.8% Fibonacci retracement increases the chances of such a reversal happening over the next few days.