Talks of Fed easing, coupled with record lows in US Treasury yields, witnessed the euro firmly advance Monday, adding more than 120 points into the close.
EUR/USD weekly price recently touched gloves with channel resistance, extended from the high 1.1569. This follows a stronger-than-expected rotation off channel support, taken from the low 1.1109, and sustained upside north of the 2016 yearly opening level at 1.0873. Closer analysis of price action has daily price crossing its 200-day SMA (orange – 1.1098), potentially heading for Quasimodo resistance at 1.1199.
H4 flow wrapped up things a touch south of 1.12, poised to retest support at 1.1148, a previous Quasimodo resistance level. Note above 1.12 we have January’s opening level at 1.1222, whereas below 1.1148, a run back to 1.11 could be on the cards, shadowed closely by February’s opening level at 1.1094. The relative strength index (RSI) is currently testing overbought conditions, printing mild bearish divergence.
A retest at H4 support from 1.1148 is likely to be seen today, though given weekly price has shaken hands with channel resistance and the lack of supporting confluence seen around 1.1148, buyers may be in a fragile position. In the event the support holds, however, a move to 1.12 could be seen.
A test of 1.12 could be interesting as possible resistance, having seen daily Quasimodo resistance at 1.1199 and January’s opening level nearby at 1.1222. A pullback from this neighbourhood could see 1.1148 back in view, with a break targeting 1.11.
Disclaimer: The information contained in this material is intended for general advice only.