The Federal Reserve surprised markets Tuesday, slashing interest rates amid concern about the potential economic toll of the coronavirus outbreak. Following a near to-the-point retest at 1.11, reinforced closely by February’s opening level at 1.1094, H4 price gained traction, eventually grasping the underside of 1.12. Note just north of 1.12 we have possible resistance coming in at 1.1222, January’s opening level. In terms of the relative strength index (RSI), we remain circulating overbought territory, producing mild bearish divergence.
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 had daily price retest its 200-day SMA (orange – 1.1098) yesterday and make a run for Quasimodo resistance at 1.1199. Assuming continued upside, another layer of Quasimodo resistance lies around the 1.1349ish region.
The test of 1.12 could be interesting as possible resistance, having seen daily Quasimodo resistance at 1.1199 merge with the level, the current weekly channel resistance and January’s opening level operating nearby at 1.1222. A pullback from this neighbourhood could see 1.11 brought back in view, closely shadowed by the 200-day SMA highlighted above.
Round numbers are prone to whipsaws due to the large number of orders they attract. With that being the case, conservative traders may opt to wait for additional confirmation before committing.
Disclaimer: The information contained in this material is intended for general advice only.