• EURUSD is trying to register its fourth consecutive green candle

• Short-term bearish trend remains dominant

• But the stochastic could open the door to a bullish reaction

EURUSD is hovering at its lowest point since the late-May trough as the market is preparing for the next key events. The bearish pressure persists but it appears to be losing its strength. More specifically, the Average Directional Movement Index (ADX) is edging lower and towards its 25-threshold, thus pointing to a muted and weakening bearish trend in the market. Similarly, the RSI continues to trade below its midpoint since late-July.

However, the stochastic oscillator is again potentially preparing to spoil the bears’ party. It is hovering in its oversold territory, but it has surpassed its moving average and appears ready to climb above the 20 threshold and the August 31 local peak. This could be the signal the bulls have been waiting for to finally stage a proper rebound.

The bulls’ first target could be to overcome the July 17, 2023 downward sloping trendline and then test the resistance set by the 50-, 100- & 200-day simple moving averages (SMAs) in the 1.0826-1.0939 area. Even higher, they could come up against the more important 1.1032-1.1095 range, which is defined by the February 2, 2023 and April 26, 2023 highs respectively.

On the flip side, the bears remain confident and could take advantage of any short-term rally. They could try to break the busy 1.0720-1.0727 area that is populated by the December 15, 2022 high and the 23.6% Fibonacci retracement of the September 28, 2022 – April 26, 2023 uptrend respectively. Lower, they could then have a look at making a new 2023 low, provided they cross the 1.0481-1.0571 region.

To conclude, market participants remain on the sidelines ahead of the next key events potentially opening the door for a small rally if the stochastic oscillator provides the necessary signal.