EURUSD maintains a bullish outlook despite falling sharply following a peak at 1.1907 last week – its highest level since January 2015. The market reached overbought levels as indicated by RSI rising above 70.
Prices have since retreated below the key 1.1800 level, which is acting as an immediate resistance level so far today. Upside momentum has faded and RSI has moved out of extreme conditions and is moving sideways. This suggests there could be some consolidation in the market in the near-term.
The current move lower is seen as a correction, with the Fibonacci level at 1.1722 expected to provide immediate support. This is the 23.6% retracement of the recent rally from 1.1118 to 1.1907. This level held as support last week. A breakdown of this support would target the next Fibonacci (38.2%) at 1.1604. From here the focus will turn to 1.1510. This is an important level as it is the 50% Fibonacci and so a break below this would start to weaken the bullish bias.
While the overall trend structure shows that the bull run is expected to remain intact, EURUSD needs to remain above the 1.1500 level. A successful break of resistance at 1.1800 could see a further move higher with scope to re-test the August 2 peak of 1.1907. Clearing this level would see the resumption of the uptrend to target 1.2000.
The technical picture shows that EURUSD is bullish and rising in an ascending channel. The crossover of the 50-day moving average above the 200-day MA on May 23 confirms the bullish outlook. A consolidation phase is seen in the near-term.
