In previous we mentioned the increased probability of a bounce in EURUSD from the major Fibonacci retracement support level around 1.10. Price has bounced from 1.0988 low and the 61.8% Fibonacci retracement level.

Green lines - bullish divergence

EURUSD ended the week at 1.1052 having bounced off the important Fibonacci support level we mentioned. Additionally we also noted that bullish divergence signs were evident in the 4 hour RSI and that was a warning for bears. This warning was a sign of increased chances of a bounce....The bounce came and it is now very important to see how this week unfolds. Has EURUSD made an equally important higher low relative to the October low of 1.0880. Is this the level where we see the start of a new upward wave that will eventually push price above 1.12?There are many chances of this happening.

In Ichimoku cloud terms EURUSD is challenging short-term cloud resistance. Support is at 1.1020 and resistance at 1.1050. Trend remains bearish as price is below the 4 hour cloud. In order for the short-term trend to change to bullish price must break above the Kumo (cloud). Additionally bulls want price to continue making higher highs and higher lows as the tenkan-sen (red line indicator) is about to cross above the kijun-sen (green line indicator). This happening below the cloud is a weak bullish signal, but still a bullish one. So bears need to be cautious. A rejection at 1.1050 if followed by a weekly close below 1.0980 would be a bearish sign.