Technical Analysis – EURUSD above 1.36 but rally loses momentum
January 24, 2014 9:07 am
The euro was propelled back above the key 1.36 level after upbeat Eurozone PMI data on Thursday.
After trading within a range since Monday, EURUSD finally broke out to rise above its 20-period moving average and above the downtrend line (from the January 14 high).
The pair also broke above a key resistance level which is represented by the 23.6% Fibonacci retracement level of the move from the December 2013 high (1.3882) to the January 20 low (1.3506). The penetration of this level acted as a catalyst to the 38.2% Fibonacci and then to the 50% retracement level. This level at 1.3695 is now acting as strong resistance. A break above this would expose the 61.8% Fibonacci level at 1.3735.
The strong 150-pip rally has evidently lost momentum and EURUSD is now consolidating at the 50% Fibonacci level. RSI has flattened out after reaching the 70 point level, indicating that momentum has weakened. Meanwhile, the stochastic is in overbought territory above 80, also warning of a possible correction to the downside. The 38.2% and 23.6% Fibonacci levels act as support while the 1.3530 level will be come into play below these levels. Below this the January 20 low (1.3506) is exposed.
The euro was propelled back above the key 1.36 level after upbeat Eurozone PMI data on Thursday.
After trading within a range since Monday, EURUSD finally broke out to rise above its 20-period moving average and above the downtrend line (from the January 14 high).
The pair also broke above a key resistance level which is represented by the 23.6% Fibonacci retracement level of the move from the December 2013 high (1.3882) to the January 20 low (1.3506). The penetration of this level acted as a catalyst to the 38.2% Fibonacci and then to the 50% retracement level. This level at 1.3695 is now acting as strong resistance. A break above this would expose the 61.8% Fibonacci level at 1.3735.
The strong 150-pip rally has evidently lost momentum and EURUSD is now consolidating at the 50% Fibonacci level. RSI has flattened out after reaching the 70 point level, indicating that momentum has weakened. Meanwhile, the stochastic is in overbought territory above 80, also warning of a possible correction to the downside. The 38.2% and 23.6% Fibonacci levels act as support while the 1.3530 level will be come into play below these levels. Below this the January 20 low (1.3506) is exposed.
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