EUR/USD rebounded from near 1.1650 on Tuesday, and during the European morning Wednesday, it managed to break above the key resistance (now turned into support) barrier of 1.1740. The pair is trading above the prior downtrend line taken from the peak of the 19th of April, and also above a new tentative short-term uptrend line drawn from the low of the 30th of May. What’s more, the recovery that started on that day was triggered after the pair tested the long-term upside support line drawn from back at the low of the 3rd of January 2017. So, having all these in mind, we believe that there is the potential for the pair to continue drifting north for a while more.
We believe that the break above 1.1740 may have opened the way for the 1.1835 barrier, marked by the peaks of the 17th and 22nd of May. If the bulls prove strong enough to overcome that resistance, then we may see them aiming for the 1.1900 zone, the break of which may set the stage for more upside extensions, perhaps towards the 1.1990 hurdle, defined by the peak of the 14th of May.
Shifting attention to our short-term oscillators, we see that the RSI rebounded from near its 50 line and now looks to be heading towards 70, while the MACD lies above both its zero and trigger lines, pointing up as well. These indicators detect accelerating upside speed and corroborate our view for further near-term advances.
On the downside, a move back below the 1.1740 support and the new tentative uptrend line could initially aim for the 1.1650 or the 1.1615 support levels. A clear dip below 1.1615 could carry more downside extensions and could aim for the aforementioned long-term upside support line. That said, even in such a case, we would still see a decent likelihood for the pair to rebound from near that line. We would like to see a clear close below 1.1520 before we start examining whether the bulls have completely abandoned the battlefield.
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