- Summary:
- EURUSD has enjoyed a 3% rally so far for this week. However, technicals suggest that the bullish run on the currency pair could soon be over.
Following the Federal Reserve’s open-ended Quantitative Easing program, EURUSD has enjoyed a 3% rally so far for this week. However, technicals suggest that the bullish run on the currency pair could soon be over.
The daily time frame shows that EURUSD is currently testing resistance at the 100 SMA and 200 SMA. This price, around 1.0550, also coincides with the 50% Fib level when drawing the Fibonacci retracement tool from the high of March 9 to the low of March 23. If today’s candlestick closes near its opening price, a shooting star would have effectively formed. This is considered as a bearish confirmation signal and could mean that EURUSD may trade lower in the coming days.
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The 1-hour time frame shows that the currency pair has room to trade lower and still maintain its uptrend. By connecting the lows of March 20, March 23, March 24, and March 25, there is trend line support around 1.0900. The psychological handle also coincides with the 61.8% Fib level when you draw the Fibonacci retracement tool from the low of March 25 to today’s high. Lastly, the price aligns with the 100 SMA and 200 SMA.
Be wary, however, if EURUSD closes above today’s Asian session highs. This would invalidate the bearish assumption on the currency pair. Instead, it could signal a potential rally to 1.1210 where EURUSD topped on December 31.