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EUR/USD Continues to Coil

The EUR/USD made a new low on the year last week near 1.11 before pulling back to the 1.1423 level. 

EUR/USD 4H Chart 2/2(click to enlarge)

The 4H chart still shows a bearish market as the moving averages are slopping down, in bearish alignment, and above price action. Meanwhile, the 4H RSI is still below 60 after tagging below 30, a sign that the bearish momentum is still in play.

Since the prevailing trend is bearish, the preferred outlook is to the downside, below 1.1260. If that happens, the EUR/USD will be pressured toward the 1.11 handle, with risk of breaking lower towards the 1.10 handle. 

If price breaks above 1.1423, it would also break a falling speedline from December as well as last week's high. This opens up some bullish correction outlook, but only in the short-term, and within the context of the prevailing medium-term bearish trend. Therefore, we should look for resistance around 1.15-1.1550.