EURUSD Continues to Range in a Descending Channel

EURUSD Analysis – The Market Continues to Range in a Descending Channel

The EURUSD market continues to range in a descending channel. Due to the accumulation of sell orders around the April 2018 supply zone, the EURUSD market has been in a downtrend since January 4, 2021. The market has been descending through a creek for several months. The downward trend continued on May 24, 2021, causing a market imbalance.

EURUSD Major Zones

Resistance levels: 1.1480, 1.2350
Support levels: 0.9560, 0.9330
Since February 7, 2022, prices have smashed through all support levels due to the bears’ prolonged market dominance. After breaking through the previous support level at 1.1480, the market entered a descending channel. Due to a market imbalance, an order block was formed on March 30, 2022, resulting in fair value gaps (FVG) that must be filled later as the EURUSD continues to respect the descending channel.

After reaching the previous resistance level of 1.1480, the EURUSD continues to fall in relation to the descending channel formed below the resistance level. Prices can be seen forming lower lows as they continue to respect the descending channel and bounce off the Bollinger Bands (BB). The lower lows are due to the prices reaching the oversold region below 30, as indicated by the Relative Strength Index (RSI).

Market Expectation

Following the four-hour timeframe break of structures (BOS), the candlesticks continue to bounce off the Bollinger Bands (BB) as prices drop impulsively. The bears appear to be offloading their short positions as the price breaks above the mid-moving average between the Bollinger Bands. The market is expected to remain within the descending channel until a true breakout occurs on either side of the channel in the daily timeframe.

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