The Euro is trading near five-month high on Monday and cracked pivotal Fibo barrier at 1.0578 (38.2% of 1.2266/0.6535 downtrend), but quick pullback indicates that bulls face headwinds.
Last Friday’s Hanging Man candle was initial warning that bulls may run out of steam, with overbought daily studies and weakening bullish momentum, adding to the notion.
Failure to register a daily close above 1.0578 barrier, would contribute to negative signals, though more evidence would be needed to verify.
Rising 10DMA offers solid support at 1.0420 and break here would generate initial signal of correction and expose more significant supports at 1.0363 (200DMA) and 1.0290 (Nov 30 trough), violation of which would weaken near-term structure, as falling thick weekly cloud also weighs.
Near-term bias is expected to remain with bulls while the action holds above 10DMA and point to consolidation before bulls resume, however, only sustained break of 1.0578 Fibo barrier would signal that bulls are on track to extend larger rally.
Res: 1.0578; 1.0608; 1.0700; 1.0786.
Sup: 1.0519; 1.0420; 1.0363; 1.0290.
