EUR/USD – Larger correction on the cards?

Or is the downtrend continuing?

EURUSD is already running into resistance, so quickly after rebounding off the lows around 1.12 late last week.

The euro started to make its comeback in recent days after coming under a lot of pressure this month but already it’s seeing resistance around 1.14, the first major test to the upside.

This coincides with the most recent area of resistance, as well as the 38.2% retracement of the late October highs to November lows and the bottom of the descending channel it broke below.

Having rebounded so aggressively, it would be natural to think that’s bearish. After such a large decline, such a shallow correction would be very negative if it breaks new lows.

But with price recovering well after the rebound off 1.14, perhaps a larger correction is on the cards. The key level remains 1.14 to the upside, with 1.15 above here then be massive.

There is some notable resistance before, like 1.1440 – 50 fib – but 1.15 is key. This coincides with the 61.8 fib, 200/233-period SMA on the 4-hour chart and maybe the top of the channel. A move above here would be very bullish over the medium term.

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