Technical Analysis – EURUSD prepares to test the 2023 highs
July 12, 2023 2:30 pmVideo
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EURUSD is edging higher again today, the fifth consecutive green candle. This is the longest run of positive daily sessions since the March 9-14 period that acted as a basis for a 5% upleg towards the 1.1100 area. EURUSD is already trading inside the busy 1.1032-1.1095 area, and a repeat of the March 2023 move could most likely open the door to a print in the vicinity of 1.1400.
In the meantime, the Average Directional Movement Index (ADX) is rapidly approaching its 25-threshold and thus preparing to point to a trending market. The RSI is close to its late-June peak but showing little appetite for a higher high. Interestingly, the stochastic oscillator has just returned to its overbought area. While it can stay there for a while, there is a developing disagreement with the EURUSD price action. While this pair has recorded a higher high, the stochastic has not registered a similar print, up to now. Should this remain the case, then a bearish divergence could overshadow the current buoyant market outlook.
If the bulls feel enthusiastic after the current upleg, they would be keen on finally breaking the 1.1032-1.1095 range that is populated by the February 2, 2023 and April 26, 2023 highs respectively. They could then have a go at the March 31, 2022 high at 1.1184 and attempt to record a new 2023 high. Higher, the path looks clear until the January 2022 high of 1.1482.
On the flip side, the bears are probably keen on limiting their recent losses. They would love to defend the 1.1032-1.1095 range and then stage a move towards the 1.0841-1.0858 area. This appears to be a strong support area as it is defined by the 50- and 100-day simple moving averages (SMAs). Even lower, the path remains tricky with the next key area coming at the 1.0711-1.0809 range.
To conclude, EURUSD bulls are riding the current wave and preparing for a new 2023 high. However, some cracks are tentatively appearing at the momentum indicators that would probably force a less aggressive approach.
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