Technical Analysis – EURUSD cheers up before ECB rate decision
July 27, 2023 11:27 am
EURUSD jumped into the 1.1100 area ahead of the ECB policy announcement early on Thursday, exiting its bearish channel on the four-hour chart.
The 50-period simple moving average (SMA) is currently keeping the bulls busy around 1.1145 and if it proves tough to surpass, the pair could switch into corrective mode. The 61.8% Fibonacci retracement of the latest downfall is adding extra importance to that region, while slightly higher at 1.1170, the resistance line, which links the highs from February and April 2022, could also force a pullback.
Encouragingly,the clear positive trajectory in the momentum indicators suggests there might be more upside pressure. A decisive close above 1.1170 could be a prerequisite for a rally towards the 1.1220 level, where the 78.6% Fibonacci mark is located. Even higher, the bulls will attempt to strengthen the long-term uptrend above the 1.1250-1.1275 resistance and towards the 1.1345-1.1365 territory. Note that the long-term ascending line from the November 2022 low is in the neighborhood.
If the bears retake control below the 38.2% Fibonacci of 1.1117, the price may seek a shelter near the 23.6% Fibonacci of 1.1080 and the 20-period SMA. A step lower could halt within the 1.1040-1.1020 support area. If this collapses, the spotlight will fall on the 200-period SMA currently at 1.0990.
Summing up, EURUSD could preserve positive momentum in the coming sessions, though only a successful penetration of the 1.1170 mark would reverse the previous bearish wave from 1.1275.
EURUSD jumped into the 1.1100 area ahead of the ECB policy announcement early on Thursday, exiting its bearish channel on the four-hour chart.
The 50-period simple moving average (SMA) is currently keeping the bulls busy around 1.1145 and if it proves tough to surpass, the pair could switch into corrective mode. The 61.8% Fibonacci retracement of the latest downfall is adding extra importance to that region, while slightly higher at 1.1170, the resistance line, which links the highs from February and April 2022, could also force a pullback.
Encouragingly, the clear positive trajectory in the momentum indicators suggests there might be more upside pressure. A decisive close above 1.1170 could be a prerequisite for a rally towards the 1.1220 level, where the 78.6% Fibonacci mark is located. Even higher, the bulls will attempt to strengthen the long-term uptrend above the 1.1250-1.1275 resistance and towards the 1.1345-1.1365 territory. Note that the long-term ascending line from the November 2022 low is in the neighborhood.
If the bears retake control below the 38.2% Fibonacci of 1.1117, the price may seek a shelter near the 23.6% Fibonacci of 1.1080 and the 20-period SMA. A step lower could halt within the 1.1040-1.1020 support area. If this collapses, the spotlight will fall on the 200-period SMA currently at 1.0990.
Summing up, EURUSD could preserve positive momentum in the coming sessions, though only a successful penetration of the 1.1170 mark would reverse the previous bearish wave from 1.1275.
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