EURUSD has been trading within a triangle pattern over the last seven weeks after it hit a 13-month peak slightly below the 1.1500 handle. The price is currently touching the upper boundary of the formation, while not far above the 20-day simple moving average (SMA) is also located.
Looking at the technical indicators, the MACD although below its red trigger line, has eased negative momentum, while the RSI also looks to be improving within the bearish area, approaching the threshold of 50. Both are moving towards their neutral levels, endorsing the sidelines move on the price action on the daily timeframe.
In the event of an upside extension, the 20-day SMA could act as immediate resistance at 1.0876, while the 40-day SMA at 1.0955 and slightly below the 1.0985 barrier registered on April 15 could come next under the spotlight. A break above this level would shift the short-term outlook to a more bullish one, especially if the price overcomes the 200-day SMA at 1.1040 as well. Further gains would open the way towards the 1.1145 region and the 1.1240 hurdle.
Alternative, a downside reversal should see the lower boundary of the triangle, near yesterday’s low of 1.0727 acting as a major support ahead of the three-year low of 1.0635. A drop below the latter, would reactivate the bearish structure in the medium and the longer-term picture, opening the door for the next key levels of 1.0560 and 1.0500 taken from the lows of 2017.
Summarizing, EURUSD is lacking direction in the short-term picture and only a decisive close below the three-year trough of 1.0635 would resume the long-term downtrend.
