[Crash Warning] EUR/USD Nearing 1.1220 Break! What Is the "Next Crash Signal" Shown by the Chart?

EUR/USD Analysis – Limited Rebound After Breaking Below 1.1220, Bearish Trend Continues

Overview (May 9, 2025)

EUR/USD is currently trading around 1.1244. After briefly falling below 1.1220 in the previous day’s sharp decline, a slight rebound has been observed. However, the upside remains limited, and technically, a clear downtrend continues. All moving averages (MAs) are positioned above the current price, and both ADX and DMI indicate a bearish bias. Volume has also increased during the decline, supporting the credibility of the trend.

Key Point 1: Clear Break Below Moving Averages

Currently, EUR/USD is trading well below the 50-hour (blue line) and 200-hour (red line) moving averages, indicating a sustained bearish trend in both the short- and medium-term. The sharp drop that began in the latter half of the 8th broke through the support zone between 1.1260 and 1.1220, and the 50MA is acting as strong resistance in the rebound phase. This structure is a typical bearish pattern, showing sustained selling pressure and the effectiveness of sell-on-rally strategies.

Key Point 2: Strengthening Bearish Trend Indicated by ADX and DMI

The ADX (yellow line) at the bottom of the chart is gradually rising in line with the downtrend, currently around 0.18–0.19. Although it has not yet reached 0.20, it can be considered the early stage of trend development. In the DMI, the –DI (red line) is clearly above the +DI (green line), indicating continued selling dominance. If the ADX exceeds 0.20, the likelihood of accelerated downside increases.

Key Point 3: Increased Volume Confirms Trend Continuation

The significant increase in volume during the sharp decline is also an important technical signal. The surge in volume when breaking below 1.1220 reflects strong selling pressure and position liquidation by market participants, increasing the credibility of the short-term low break. During the current minor rebound, volume has decreased, showing no signs of strong buying interest.

※Image Source: cTrader platform

Outlook and Trading Strategy

EUR/USD price movement is likely to diverge depending on the following technical points:

• Can it break through the 1.1260 resistance? If it breaks above this level, a temporary rebound trend may come into view, but further upward movement is needed for a clear trend reversal.
• Retesting and breaking below the 1.1220 support: If this level is breached again, the next targets will be around 1.1180–1.1150.
• Whether ADX exceeds 0.20: This will be a key point to determine if the bearish trend becomes more definitive.

Example Trade Scenarios

Bearish Scenario (Sell on Rally)
Entry: Short entry after confirming a pullback at 1.1245–1.1260
Target: 1.1180–1.1150
Stop Loss: Above 1.1275

Bullish Scenario (Short-term Rebound)
Entry: Long entry after confirming a bottom at 1.1220
Target: 1.1260
Stop Loss: Below 1.1200

Conclusion:

EUR/USD remains in a technically bearish environment. It is trading below both the 50-hour and 200-hour MAs, ADX is rising, –DI is dominant, and volume has increased during the decline—all of which reinforce the bearish outlook. Unless the price breaks through 1.1260, the sell-on-rally strategy remains valid. It's essential to closely monitor the developments and maintain solid risk management while following the trend.

Disclaimer:

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