Technical Analysis – EURUSD pivots from 26½-month high; bullish signals intact

Anthony Charalambous, XM Investment Research Desk

EURUSD retreated abruptly from the recent multi-year high of 1.1908 with sellers attempting to cement further negative moves. This can be viewed in the pause of the blue Kijun-sen line and the latest weakening of the short-term oscillators.

Despite the stochastic oscillator having turned bearish and the current stalling in the MACD and the RSI, positive signals are still present, as the MACD, in the positive region, remains above its red trigger line and the RSI holds above 70. Moreover, the positively charged Ichimoku lines and the rising simple moving averages (SMAs) reflect prices’ predominant bullish bearing.

If buyers re-emerge, early resistance may arise from the 1.1800 handle ahead of the 2½-year high of 1.1908. Conquering this peak, a more sustained climb could test the 1.1995 high, around the 1.2000 psychological number, ahead of the 1.2055 barrier from April of 2018.

If sellers extend downside pressure, initial constrictions may occur at the 1.1698 low, where the red Tenkan-sen line is also located. Pushing below could then find some friction at the 1.1640 level, that being the 23.6% Fibonacci retracement of the up leg from 1.0766 to 1.1908. Should sellers retrace past the blue Kijun-sen line at 1.1546, they may encounter a tough support region from 1.1500 until the 38.2% Fibo of 1.1472. A sustained plunge could then set the focus to the 1.1370-1.1337 section.

Summarizing, in the short-term picture, positive risks remain above 1.1698 and a break above 1.1908 would boost this bias, while a drop below 1.1500 could trigger negative tendencies.