EURUSD rebounded on the 1.2050 support level on January 18, flirting now with the 20- and 40-day simple moving averages (SMAs). In the broader outlook, the price has been developing within an upward sloping channel since June 2020.
Looking at the technical indicators, the stochastic is moving towards the overbought territory, suggesting a strong bullish action, however, the RSI is standing marginally above the 50 level.
In case of an upward attempt above the SMAs, the pair would likely meet resistance at the 32-month peak of 1.2348 ahead of the 1.2400 handle, registered on April 2018. A break above this crucial level would open the way for gains above the channel at 1.2470 and 1.2555, taken from the highs on March and February 2018 respectively.
On the flip side, immediate support is being provided by the 1.2050 barrier, inside the Ichimoku cloud before tumbling to the 23.6% Fibonacci retracement level of the upward wave from 1.0635 to 1.2348 at 1.1945, which overlaps with the 100-day SMA. A drop below this level could hit 1.1920 and even lower the 1.1745 obstacle.
In the medium term, the bullish outlook remains intact, with the 100-day SMA pointing upwards. However, should prices decline towards the 100-day MA, this would risk shifting the medium-term picture to a more neutral one.