We have been seeing a prospective technical rally developing in recent sessions, as the euro has now formed three positive candles in a row on the daily chart. The question is whether real traction can be found in recovery, or whether this is simply a move that falters once more. Taking a step back, we see this as a rally within a bigger bear phase and a move to simply help renew downside potential. For now though, the market is running higher, and the bulls will be taking heart from the improvement in momentum indicators. With the RSI rising back above 40, bull crosses now on MACD and Stochastics, the near term rally is progressing. Trading decisively clear above the overhead supply and resistance in the band $1.0865 (near term base neckline) and $1.0875 (old key October low) opens a +90 pip further recovery and a $1.0950 target area. The next real resistance is not until $1.0980 now, with the 8 week downtrend resistance around $1.1000. With higher lows and higher highs in each of the past thee sessions, the near term rebound is doing well. But it is an unwinding move and is unlikely to last too long. Yesterday’s high of $1.0890 is initial resistance, with support at $1.0830.
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