Last week, somewhat surprisingly, we saw the pair breaking out to the upside instead of continuing to the downside. Now it stands right in the resistance area of 1.1150 – 1.12 and it’s unlikely that the resistance will hold at this point.
It’s much more likely for the price to continue to move up probably reaching the lower bound of the broken 8-month channel at 1.13 – 1.1330. Strong bullish momentum could push the pair through this area and towards 1.14.
The MACD indicator also turned up pointing to more upside.
EURUSD Daily chart – More upside likely!
As we can see here the price currently stands above the weekly and monthly pivot points (W Pivot and M Pivot on the chart). In addition, the RSI oscillator is showing an overbought reading.
These 2 things signal that a retracement is likely in the near term before any upside continuation can occur. If you are considering to go long then somewhere close to the pivot points will be a good area to do so.
Strong resistance to the upside is at the weekly resistance 1 (1.1260) and weekly resistance 2 (1.1350) which for this week happen to coincide with the monthly pivot points. Additionally, multiple Fibonacci levels align very close to these two price levels, making the resistance even stronger.
EURUSD 4h chart – Some retracement likely before upside continuation
The bullish price action is very fast and the RSI is overbought on the 1-hour chart as well. The middle weekly pivot point (1.11) is the first support in sight, strengthened by the previous highs and a couple of Fibonacci retracements (marked with orange and purple on the chart).
Buying the pair at or near 1.11 seems like the best area from this point. If the market breaks it to the downside then the next support levels would be 1.1050 and 1.1017 – 1.10.
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