A continuation of EUR/USD bearish trend is expected

<p>EUR/USD spent most of April in a choppy trading range consolidation above its new 12-year low of 1.0461 that was established during the prior month […]</p>

EUR/USD spent most of April in a choppy trading range consolidation above its new 12-year low of 1.0461 that was established during the prior month of March.

The currency pair opened the month of April around the 1.0740 level, on a rebound from March’s noted 12-year low.

From April’s open, EUR/USD quickly rose to a high of 1.1035 in early April, where it then turned abruptly back to the downside from the key 50-day moving average, which had long acted as major resistance.

In making this downturn, price action also formed a large triangle consolidation pattern, providing some indication of a potential downward continuation of the entrenched bearish trend.

This triangle pattern was quickly broken to the downside in early April as expected, with a simultaneous breakdown below the key 1.0800 support level. The drop continued towards its 1.0500 bearish target until it bottomed out around 1.0520 in mid-April, just short of reaching its downside price objective.

That low was then followed by another rise back up to 1.0800 resistance, after which the currency pair has continued to fluctuate above and below this level up to the time of this writing in late April.

Also as of the time of this writing, EUR/USD has tentatively emerged above the noted 50-day moving average, a sign of a potential further rebound from the currency pair’s lows. This rebound, however, should be limited on the upside by a strong and persisting bearish trend.

This downtrend goes back almost a year to the May 2014 high near 1.4000 and continues to be clearly intact, despite recent rebounds from its lows. Furthermore, the euro remains exceptionally weak against all other major currencies.

Going into May, if the euro continues its longstanding weakness as expected and the dollar resumes its previous bullishness, EUR/USD should continue its bearish trend towards lower lows.

As of late April, major resistance continues to reside around the key 1.1100 level to potentially limit a larger rebound. If EUR/USD continues to trade under that major resistance area, the currency pair should likely re-target the 1.0500 level to the downside once again. On any breakdown below 1.0500, which would confirm a continuation of the current downtrend, the next major downside objective continues to reside around the 1.0200 level.

EUR/USD daily chart

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