EURUSD opened on the negative side in the first trading day of 2022, unable to crawl above the 1.1370 resistance and the 50-day simple moving average (SMA) despite Friday’s last-minute pickup.
The momentum indicators, however, continue to reflect a neutral-to-bullish bias, signaling the bulls may not abandon the battle yet. With the MACD remaining elevated above its November lows, and set to enter the positive territory, and the RSI having extended its uptrend above its 50 neutral mark, there is an opportunity for further recovery. Note that the red Tenkan-sen and Kijun-sen lines have maintained their recent positive intersection, suggesting buying pressures are still present.
Beyond the 1.1370 border, there is another tough wall that the bulls need to crack to raise buying confidence in the market. That is, the descending trendline stretched from May’s peak of 1.2265 currently seen around 1.1446. Should it give way, the price could initially test the 50% Fibonacci retracement of the 2020 rally (1.0636 -1.2348) at 1.1492 before speeding up to the 1.1600 psychological mark.
In case the current weakness persists, the 20-day SMA could buffer the drawdown around 1.1300, while a bit lower, the 1.1260 support area could prevent a return to the 1.1180 bottom. Beneath the latter, which overlaps with the 61.8% Fibonacci, there is no major support until the 1.1000 number.
Summarizing, EURUSD could not stage an impressive start to 2022, but hopes for progress remain alive. A sustainable move above the 1.1446 – 1.1492 area could trigger the next bullish wave.
