EURUSD hit a fresh 2 1/2 -year high of 1.1959 today. The pair has shifted to bullish from neutral after breaking out of a 3-week consolidation phase between 1.1661 and 1.1900.
What was previously the top of the range and a strong resistance level, the key 1.1900 level is now expected to act as support. There is scope to target the next key round-figure at 1.2000.
But technical studies show that the market is close to being overextended since RSI is approaching 70 (overbought level), suggesting that upside momentum is fading. MACD has turned back down. A correction to the downside cannot be ruled out.
A break below the range-low of 1.1661 would open the way for a more significant decline towards 1.1471, which was tested as both support and resistance recently. A move back below 1.1312 would indicate that the upside bias has weakened since this would result in a more than 50% retracement of the uptrend from 1.0820 to 1.1959. A deeper correction would target major levels at 1.1300 and 1.1100.
Sustained trading above 1.1900 would increase the odds for further upside. A rise above 1.2000 would open the way towards 1.2200.
The bullish market structure in the medium-term remains intact and the pair continues to rise within an ascending channel. The crossover of the 50-day above the 200-day moving average on May 23 highlights the bullish picture.
