EUR/USD upward correction on the way

on Nov 17, 2014

The strength seen in the euro during the last couple of sessions, which held it above the key support level of 1.2500, has suggested some signs of a recovery and thus the 1.2500 level will be a significant one  for the euro bulls this week.

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The 4-hour chart shows the pair has been in a clear downtrend since June 2014. After the pair tested 1.2500, it made several attempts to break higher, but the 50-period SMA provided strong resistance near the 1.2900 and the 1.2700 areas, preventing the price from testing the descending trend line. 

Bearing the above in mind, if the buyers manage to maintain the price above the psychological level of 1.2500, the next target for the pair would be the 1.2600 level which coincides with the 50-period SMA. From there, if the bulls manage to win the battle then we could see further pressure on the 1.2700 level. Our bullish scenario is supported by the MACD oscillators, since it is moving upwards and above its trigger line, suggesting that the pair is ready to push higher. Furthermore, the RSI and the Stochastic moved away from their oversold levels indicating some weakness to the downtrend. 

Alternatively, a failure to break above the 1.2600 level, could provide an opportunity to retest the key support level at 1.2400, and thus would negate any bullish scenarios for the EUR/USD pair.

Report by

Efthivoulos GRIGORIOU

Technical Analyst

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