EURUSD continues to recoup losses which drove the market to a 1-year low of 1.1300 on August 15, with a spirited recovery to an almost 1-month high of 1.1652 during Monday’s Asian session. For short-term trading, the RSI and the MACD indicate that positive momentum could hold as the former picks up speed above the 50 neutral mark and the latter distances itself above its red signal line. Moreover, the market created a bullish doji around 1.1300, justifying the recent positive reversal. However, the fast Stochastic oscillator is warning that the rally could be overstretched and negative corrections in the very short-term are still possible; the green %K line and the red %D line move south after posting a bearish cross above 80 in the overbought area.
Should bullish pressures dominate, the price could try to overcome the 1.1700 round-level before it touches the 38.2% Fibonacci of 1.1724 of the downleg from 1.2412 to 1.1300. Even higher the area between 1.1800 and 1.1850 which encapsulates the 50% Fibonacci and June’s peaks could attract greater attention as any decisive close above this zone could trigger stronger bullish actions and at the same time increase speculation that an uptrend is on the way.
On the flip side, a reversal to the downside could meet support at the 23.6% Fibonacci of 1.1560, while slightly lower, the 1.1500 round-level could be a stronger obstacle to pass through as the market failed to pierce the level a couple of times from the end of May to early August. However, if bears manage to break through that barrier too, attention could turn to the 1.1400 and 1.1300 psychological levels.
Turning to the medium-term trading, the market returned to neutrality after the rebound on the 1.1300 key level, rising back into the range it recorded between 1.1500 and 1.1850 in the previous three months. Any close above this range could shift the medium-term picture to bullish, while a close below that could bring bearish outlook into play again.
To sum up, the market looks bullish in the short-term, while in the medium-term the picture remains neutral.
