[EUR/USD Reversal Incoming!?] Will a Break Above 1.1220 Trigger a Massive Rally? A Must-Watch Turning Signal!

[EUR/USD 1-Hour Chart Analysis] 1.1220 as the Key Battleground: Reversal or Another Drop?

Overview (May 16, 2025)

EUR/USD is currently trading around 1.1212. On the recent 1-hour chart, there are signs of recovering bullish pressure. While the market has been dominated by selling sentiment, a potential reversal is emerging. Whether the pair can break through the 1.1220 resistance zone—a recent high—will be crucial in determining the short-term direction.

Key Point 1: Moving Averages Indicate a Possible Reversal

Currently, EUR/USD is clearly trading above the 50-hour moving average (blue line), confirming a return of short-term buying pressure. Moreover, the 50MA itself is beginning to slope slightly upward from a flat trend, suggesting a possible shift to acting as support.

On the other hand, the 200-hour moving average (red line) is transitioning from an upward slope to a flatter stance and is serving as strong resistance in the 1.1220–1.1240 range. For a clearer uptrend to develop, this 200MA must be decisively breached. A successful breakout would make 1.1260–1.1280 the next target zone.

Key Point 2: ADX and DMI Suggest Early Signs of Trend Shift

The ADX (yellow line) remains below 0.10, indicating that no strong trend has formed yet. However, this can be interpreted as a "quiet phase" before a transition from a range-bound to a trending market begins.

Looking at the DMI, the +DI (green line) has crossed above the -DI (red line), with the gap gradually widening. This structure implies growing bullish momentum. If the ADX rises above 0.20, it would likely signal the beginning of a clearer uptrend.

Key Point 3: Volume Signals Market Shifts

While overall volume has remained calm recently, it has shown a slight uptick during specific bullish movements. Notably, there was a clear increase in volume when breaking above the 50MA, suggesting the presence of speculative buying at technical levels.

When price increases are accompanied by rising volume, the move is often considered more reliable. If the 1.1220 breakout is accompanied by volume, this could strengthen the bullish case further.

※Image source: cTrader platform

Outlook and Trading Strategy

Based on the following key levels, EUR/USD is likely to develop along one of several scenarios:

• Can it break the 1.1220–1.1240 resistance zone? This area aligns with recent highs and the 200-hour MA. A breakout would open the path to mid-term targets like 1.1260 or 1.1280.
• Can it hold above the 50MA (~1.1190)? If pullbacks are supported at this level, the short-term bullish trend remains intact. Falling below it could increase downside risks.
• Will ADX exceed 0.20? For trend-following traders, this indicator’s move is an important confirmation signal.

Example Trade Scenarios

Bullish Scenario (Breakout Play)
Entry: Long after confirmed breakout above 1.1220
Target: 1.1260–1.1280
Stop Loss: Below 1.1190 (clear break under 50MA)

Bearish Scenario (Failure → Downtrend)
Entry: Short after confirmed break below 1.1190
Target: 1.1160–1.1140
Stop Loss: Above 1.1225 (breakout above resistance)

Conclusion:

From a technical perspective, EUR/USD appears to be in the early stages of a trend shift. Breakout above the 50MA, changes in DMI structure, and volume responses are all aligning. While an uptrend is becoming more likely, strong resistance near the 200-hour MA remains, putting the market at a critical juncture.

Future trades should be based on whether the 1.1220 breakout occurs. Combine this with monitoring ADX movements to validate the trend. Both bullish and bearish strategies should be kept in mind, with a flexible approach recommended.

Disclaimer:

This article is for informational purposes only and does not constitute investment advice. All trading decisions should be made at your own discretion.
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