EURUSD has finally bounced as expected towards 1.1250. The bullish divergence warning signs we mentioned in our last analysis have been confirmed and price is now testing short-term channel resistance as expected.

Red lines - bearish channel

Green line - bullish divergence

Black line - RSI resistance

The RSI resistance has been broken. The bearish channel remains and we remain cautious as a rejection at current levels would push price to 1.1150-1.1170. Breaking above 1.1280 which is the next important resistance would be an important short-term bullish reversal sign. Bulls now want to see price making higher highs and higher lows, Support is at 1.1195 and they do not want to see price below it. On the other hand they want to see price pull back make a lower high and then break out of the bearish channel. Bears remain in control of the trend despite the bounce in EURUSD. Bears now want to see a rejection at current levels and a break below 1.12.