EURUSD rebounded on the 1.1430 support and on the 50.0% Fibonacci retracement level of the upleg from 1.0340 to 1.2550 near 1.1450 on Friday, creating a sharp bullish day. Currently, the price seems to be steady and the technical indicators are in confusion for the next movement in the price. However, the impressive sell-off in the preceding days, drove the price below the 20- and 40-simple moving averages (SMAs) in the short-term, which posted a bearish crossover. Also, the inverse head and shoulders pattern is still in place.
Momentum indicators are pointing to a neutral to positive bias in the short term with the RSI just below 50 and is sloping marginally up, while, the MACD oscillator is moving sideways in the negative territory and is moving near the trigger line.
In the event of an upside reversal, creating more gains, the 20- and 40-SMAs could provide immediate resistances to the price at 1.1560 and 1.1605 respectively. Slightly higher, the 1.1620 peak is the next obstacle for the traders and if this level is successfully surpassed, it could drive prices towards the 38.2% Fibonacci of 1.1710. A break above it would take the pair until the psychological level of 1.1800.
In the wake of negative pressures and a drop below the 1.1430 significant support, negative pressures towards the 1.1300 handle could increase. Even lower, the 61.8% Fibonacci region of 1.1185 could be the next target.
Having a look at the longer timeframe, EURUSD has been developing within an inverse head and shoulders pattern since June, with shoulders at 1.1530 and 1.1430, the neckline at 1.1800 and head at 1.1300. Investors are waiting for a daily close above the 1.1800 barrier for a clear upside correction until the 1.2000 strong resistance.
To sum up, the price consolidates within the formation and has no clear directional movement at the moment, so investors need to wait the completion of this pattern for any positions in the near future.
Origin: XM
