EUR/USD continued trading north on Tuesday, breaking above the resistance (now turned into support) barrier of 1.1700, marked by the peak of the 1st of August. The pair has been in a recovery mode since the 15th of the month, while last Friday, it managed to emerge and close above the prior medium-term downside resistance line drawn from the peak of the 14th of April. In our view, the break above that line keeps the door open for the pair to continue its upside trajectory for a while more.
We believe that the break above 1.1700 may have opened the way for the 1.1750 zone, which acted as a strong resistance obstacle from the 10th until the 31st of July. If the bulls are strong enough to overcome that zone this time, then we may see them extending the rally towards the 1.1790 hurdle, marked by the peak of the 9th of July.
Looking at our short-term oscillators, we see that the RSI rebounded from its respective upside support line and crossed above 70. It continues to point up, even within its above-70 territory. The MACD lies above both its zero and trigger lines, pointing north as well. These indicators detect strong upside momentum and support the notion for EUR/USD to continue drifting higher.
On the downside, we would like to see a decisive break below 1.1640 and the short-term uptrend line taken from the low of the 15th of August before we abandon the bullish case, at least in the near-term. Such a break could encourage the bears to drive the battle towards the 1.1600 level, the break of which could tempt them to challenge the prior medium-term downside resistance line drawn from the peak of the 14th of April as a support this time.
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