EURUSD started the day with a gap higher relative to Friday’s close, marking a five-and-a-half month high of 1.0919 and exceeding the 200-day moving average (MA) along the way. The pair has since eased off but is still significantly above the previous day’s close.
Technical indicators, including the RSI and MACD, are depicting a bullish short-term picture for the pair. Specifically, the RSI is well above 50 -its perceived neutral level- at 67. The MACD histogram is positive and it has risen above the red signal line. Bear in mind though, that RSI is fairly close to the 70 overbought level.
The pair has been so far roughly oscillating between the 50% and 61.8% Fibonacci retracement levels of the November 9 to January 3 downleg during today’s trading. The price is currently below the 1.09 handle. This is a potential psychological level that could resist a daily close above it. If the price moves above this level, the 61.8% Fibonacci level (which was not violated during the day) at 1.0932 could act as an additional barrier to the upside.
On the downside, the 200-day MA at 1.0834 comes into view as immediate daily support. Slightly below, the 50% Fibonacci at 1.0818 might offer additional support. Further down, the area around 1.0770 was of significance in the recent past and could offer support as well. Below this, the 38.2% Fibonacci at 1.0704 and the 1.07 handle, a potential psychological level, could form another area of support.
Looking at the medium-term outlook, prices have been consolidating since late 2016 forming a neutral picture.
Overall, the short-term bias is looking bullish and the medium-term neutral.
Origin: XM
