EUR/USD hits crucial floor: Bounce back or breakdown ahead?

Key highlights

• EUR/USD started a downside correction and traded below 1.1320.
• A connecting bearish trend line is forming with resistance at 1.1330 on the 4-hour chart.

EUR/USD technical analysis

Looking at the 4-hour chart, the pair started a fresh decline below the 1.1380 and 1.1350 levels. There was a close below the 1.1320 level and the 100 simple moving average (red, 4-hour). Finally, the pair tested the 1.1200 support zone and the 200 simple moving average (green, 4-hour).

A low was formed at 1.1187 and the pair is now consolidating losses. On the upside, the pair could face resistance near the 1.1250 level. The next key resistance sits near the 1.1275 level and the 23.6% Fib retracement level of the downward move from the 1.1572 swing high to the 1.1187 low.

The first major resistance sits at 1.1320. There is also a connecting bearish trend line forming with resistance at 1.1330 on the same chart.

A close above the 1.1330 level could set the tone for another increase. In the stated case, the pair could even clear the 1.1380 resistance. The next major stop for the bulls could be near the 1.1425 level and the 61.8% Fib retracement level of the downward move from the 1.1572 swing high to the 1.1187 low.

On the downside, immediate support sits near the 1.1190 level and the 200 simple moving average (green, 4-hour). The next key support sits near the 1.1150 level. Any more losses could send the pair toward the 1.1020 level.