EURUSD reversed lower after reaching the highest level in six months last week, when it touched 1.1463. Prices found support at 1.1233 – which is around the 23.6% Fibonacci retracement level of the 1.0520 to 1.1463 upleg (December 2015 to April 2016 rise). RSI has fallen to test the 50 level, suggesting the stronger downside momentum.
The break below the key 1.13 level which coincides with the 21-day moving average, strengthened the bearish view. Failure to close above 1.13 would increase the chance of another leg lower and open the way for a test of the 38.2% Fibonacci at 1.1102. A further decline to the 50% Fibonacci at 1.0991 would weaken the recent short term bullish trend of the past four months.
To the upside, resistance lies at the April 12 high of 1.1463. A move above this peak would see a resumption of the uptrend with scope to target the October 2015 high of 1.1483.
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