EURUSD: STRONG TRENDLINE AND RSI DIVERGENCE SIGNAL UPSIDE POTENTiaL
The EURUSD has experienced a pullback in February due to concerns about inflation . This concern was further highlighted by yesterday’s CPI (Consumer Price Index) data, which revealed that inflation may stick around longer than expected. The release of this data has led to a boost in the USD and a bearish outlook for the EURUSD .
However, despite the bearish price action, some traders are taking a contrarian view and looking for potential opportunities to buy into the pair. One factor supporting this view is the strong trendline that the EURUSD is currently approaching. This trendline has previously held, indicating potential support for the pair in the near term. If the trendline can hold, it may create a good entry point for traders looking to buy into the pair.
Additionally, a printed RSI divergence on the 4-hour chart is providing a reason for cautious optimism . RSI is a popular technical indicator used to identify potential areas of overbought or oversold conditions. When the RSI diverges from price, it can suggest that the current price movement is losing momentum, potentially leading to a reversal. This could be a sign that the bearish momentum for the EURUSD may be losing steam.
However, traders must also weigh the risks involved. These risks include ongoing concerns about inflation , geopolitical issues, and economic uncertainty caused by the COVID-19 pandemic. In particular, the CPI data released yesterday suggests that inflation may continue to be a concern for some time, which could create further pressure on the EURUSD .
In summary, while the current market sentiment for the EURUSD is bearish , some traders are taking a contrarian view and looking for potential opportunities to buy into the pair. The strong trendline and RSI divergence are providing reasons for cautious optimism . However, traders must also consider the risks and uncertainties in the market, particularly given the concerns about inflation and the broader economic outlook.