EURUSD started the year on the negative side, closing with marginal losses for the second week. The pair, however, managed to pause its sell-off near the 50-day simple moving average (SMA) on Friday, where the 38.2% Fibonacci of the 1.1411-1.0878 downleg is located, retaining at the same time its upward direction off the 28-month low of 1.0878 alive.
The 50% Fibonacci of 1.1144 is currently in target as the reversing RSI and the Stochastics are endorsing the recent positive correction in the price. Yet, for traders to resume buying appetite, a decisive rally above the 1.1200 level and the 61.8% Fibonacci would be an ideal move. In such a case and if the price surpasses its 5-month peak of 1.1238, the door would open for the 78.6% Fibonacci of 1.1297.
Alternatively, if the bears drive below the 38.2% Fibonacci of 1.1080, attention will turn to the short tentative ascending trendline, where any violation could trigger a sharper decline probably towards the 23.6% Fibonacci of 1.1000. Further down, the area around 1.0940 may act as support too before the spotlight shifts to the 1.0878 bottom.
Meanwhile, it would be interesting to see whether the 20-day SMA will finally register a bullish cross with the 200-day SMA after crossing below it on May 2018.
Summarizing, EURUSD is searching for a rebound, though only a significant rally above 1.1200 would give the lead to the bulls. In the medium-term picture, the pair is holding an upward direction which would come under evaluation if the price approaches the tentative supportive trendline.
Origin: XM
