Technical Analysis – EURUSD eyes April high after rebounding off 200-day SMA
EURUSD has clawed its way up above two major barriers – the 20-day simple moving average (SMA) and the 50% Fibonacci retracement of the January-March downleg, restoring its bullish bias after the uptrend stumbled at the end of April.
But the momentum indicators continue to point to some weakness, namely, the RSI is tilting downwards today, although the MACD has just crossed above its red signal line.
The bulls’ hesitance to charge forwards reflects the slight caution in the markets at the start of the week, amid the lack of progress in the US-Iran negotiations, President Trump’s meeting with his Chinese counterpart later in the week, and the crucial US CPI report out on Tuesday.
For the positive momentum to prevail, EURUSD would need to extend its gains until at least the 61.8% Fibonacci of 1.1825, which is near the April high of 1.1848. Surpassing this peak would signal a resumption of the short-term uptrend that began in mid-March. The next key resistance after that would likely be found at 1.1925.
However, if the pair slips back below the 20-day SMA at 1.1735, there’s a danger of it getting stuck in a sideways range, with the 200-day SMA and 38.2% Fibonacci of 1.1666 forming a strong floor. A breach of that floor would expose the 50-day SMA at 1.1632 and the 1.1600 level slightly lower.
Summing up, EURUSD is well supported at the moment and stands a good chance of reclaiming the 1.1800 handle. But only a climb above the April peak of 1.1848 would solidify the uptrend, while a drop below the 200-day SMA would shift the focus back to the downside.
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