EURUSD is a bit tricky at the moment. The cross has been in a downtrend for the past two months and has been quite stretched lately, but now there is a warning sign in the form of RSI divergence.
EURUSD closed lower yesterday but RSI did not which means RSI values are not confirming the lower EURUSD levels. RSI divergence is a sign of a weakening (bearish) trend.
However, RSI divergence can go on for quite some time but should be taken seriously.
The support around 1.0480 is strong – see weekly chart - and one should expect a correction. However, RSI divergence is not a reversal sign just a warning of trend exhaustion. A bottom and reversal pattern could be forming in next couple of days.
If EURUSD takes out 1.0620 expect upper falling trendline to be tested. And a possible move to at least 1.07.
However, despite a looming short-term correction the medium-term trend is bearish and if EURUSD is closing lower and RSI divergence is cancelled by lower values there is no strong support until around 1.0241. But I am very confident we’ll see a correction before reaching that level. (This is not meant as a recommendation!)
First indication of a correction unfolding is likely if RSI is closing above its falling blue trend line. A close back above the 40 threshold coulkd accelrate a corrective move higher