EUR/USD is moving in an uptrend, as seen on its 1-hour time frame. It is making a test of the rising trend line connecting the lows of the price while stochastic is in the oversold zone.

A bounce might take place soon, possibly when stochastic crosses up and indicates buying momentum.

If that happens, EUR/USD could make its way back to its former highs near the 1.4000 major psychological resistance.

On the other hand, a breakdown might indicate that the uptrend is going to reverse. After all, the latest drop has been very sharp and another selloff could be in the cards.

If that’s the case, EUR/USD could make its way back to the next visible support zone.

Going long at market with a tight stop below the trend line or the 1.3800 mark could yield a good return on risk if one aims for the 1.4000 area.

Content curiosity of FOREXCycle

Editor’s Note: Equity investors/traders can use the Currency Shares Euro Trust (FXE, quote) ETF to take positions in the euro without a FOREX account.  The ETF looks to track the price of the euro, minus ETF fee. The fund seeks to reflect the price of the euro with the shares representing a cost-effective investment relative to investing in the FOREX market.