【EUR/USD】1-Hour Chart Analysis - May 1, 2025

EUR/USD Analysis – Searching for Lower Levels Below 1.1320, Clear Downtrend Led by Sellers

Overview (May 1, 2025)

EUR/USD has broken below the critical support at 1.1320, entering a clear technical downtrend. The current chart structure indicates the early stages of a typical bearish trend, characterized by lower highs and lower lows. As long as rebounds remain limited, a bearish outlook is expected to persist. A combination of signals from the ADX, DMI, moving averages (50MA & 200MA), and increasing volume confirm the strength of the downward pressure and the emergence of a trend. In the short term, defending the 1.1300 level is crucial; a break below could lead to a correction towards the 1.1250 range.

Key Point 1: Clear Break Below Moving Averages Confirms Trend Reversal

EUR/USD is trading well below both the 50-hour (blue line) and 200-hour (red line) moving averages, confirming a trend reversal. Notably, from April 30 to May 1, the 50MA has consistently acted as resistance, providing an ideal entry point for selling on rebounds. Additionally, the "death cross" pattern, where the 50MA remains below the 200MA, continues, indicating a medium-term bearish structure.

Key Point 2: ADX and DMI Indicate Early Stages of Downtrend

The ADX (yellow line) at the bottom of the chart is currently in the high 0.15 range and gradually rising. As it approaches the 0.20 threshold, which signals the emergence of a trend, caution for a breakout increases. Furthermore, the DMI shows the –DI (red line) clearly above the +DI (green line), suggesting a dominant selling force. The relationship between the ADX and –DI also supports the interpretation of an initial phase of a downtrend.

Key Point 3: Increasing Volume Indicates Reliable Selling Pressure

Volume trends are noteworthy. Since the London session on April 30, volume has been gradually increasing, with a significant spike observed during the Tokyo session on May 1, coinciding with the break below 1.1320. This indicates that market participants are actively moving towards selling, reinforcing the reliability of the downtrend. In technical analysis, a breakout accompanied by volume is one of the most reliable signals.

※Image Source: cTrader platform

Future Outlook and Trading Strategy

The current EUR/USD market is at a juncture with scenarios diverging based on key levels and technical conditions.

• Continued Break Below 1.1320 Support: A clear break below this line shifts focus to the next key levels at 1.1300 and 1.1250.
• Selling Reaction in the 1.1340–1.1350 Zone: Even if a rebound occurs, this zone is likely to act as strong resistance, making a sell-on-rebound strategy effective.
• ADX Surpassing 0.20: If the ADX breaks above 0.20, it signals the start of a significant trend, providing a favorable timing for building short positions.

Example Trading Scenarios

Bearish Scenario (Expecting Continued Decline)
Entry: Confirm break below 1.1320, then enter short
Take Profit Target: 1.1280–1.1250
Stop Loss: Above 1.1355

Bullish Scenario (Aiming for Short-Term Rebound)
Entry: Confirm rebound near 1.1320, then enter short-term long
Take Profit Target: 1.1345–1.1350
Stop Loss: Below 1.1300

Summary:

EUR/USD has entered a clear technical downtrend, with a sell-on-rebound strategy expected to remain effective. Multiple signals, including moving averages, ADX, DMI, and volume, all support the downward movement. The break below 1.1320 could provide further direction to the market. Particularly, if the ADX surpasses 0.20, it would indicate an acceleration of the selling trend, making it a crucial factor to monitor for determining trading direction.

Disclaimer:

This article is intended for informational purposes only and does not constitute a recommendation to buy or sell any specific currency pair. All trading decisions should be made at your own risk.
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