EUR/USD spiked north during the European morning Monday, breaking above the resistance (now turned into support) barrier of 1.2345. The pair continues to trade above the long-term uptrend line drawn from the low of the 10th of April 2017, which keeps the broader upside path intact. However, it is also trading below the near-term downside resistance line taken from the peak of the 16th of February and thus, we prefer to maintain our flat stance with regards to the broader outlook.
For now, if the bulls manage to remain in the driver’s seat, we would expect them to target the 1.2395 resistance zone, defined by the peak of the 11th of April. Another break above that level is possible to set the stage for extensions towards our next resistance of 1.2420, or the downside resistance line drawn from the peak of the 16th of February.
Looking at our short-term oscillators, we see that the RSI rebounded from near its 50 line, while the MACD, already positive, has just poked its nose above its trigger line. These indicators reveal upside momentum and support the case for EUR/USD to continue trading north, at least in the short run.
On the downside, even if the rate falls back below 1.2345, it would still be trading above the aforementioned long-term uptrend line, and thus we would still see a decent likelihood for a rebound from near 1.2300, or from that uptrend line.
We would like to see a decisive dip below that line before we abandon the bullish case. Such a dip could initially aim for the 1.2260 zone, the break of which could carry more downside extensions, perhaps towards our next support territory of 1.2215, defined by the low of the 6th of April.
