The development of a recovery on the euro (or should that be a corrective move back for the dollar) continued yesterday with another strong gain on the day, but also a decisive positive candlestick. The move higher has now had four positive closes in a row and with further gains today, the recovery is now pushing through key technical barriers. Momentum indicators are turning higher, with a bull cross on Stochastics (close to confirming today) and RSI rising back above 40. We have been focusing on the recovery breaking through the 23.6% Fibonacci retracement (of $1.1492/$1.0635) at $1.0835 this week and with a decisive bull candle yesterday puling clear, there is an increasingly encouraging look to the rebound now. Pulling clear of the old October low of $1.0875 has added further weight to this, whilst also breaking the resistance of the sharp two and a half week downtrend (at $1.0855 today). The next target on the daily chart is the 38.2% Fib around $1.0965. The hourly chart shows a move above $1.0885 has opened the path for a recovery. Already a well-defined uptrend has forming on the hourly chart, with higher lows and higher highs. Intraday weakness is being used as a chance to buy. There is now a good band of support between $1.0830/$1.0885 today which is a near term “buy zone”, which will remain so whilst the hourly RSI remains consistently above 40. The base pattern on the hourly chart above $1.0830 implies a target of around $1.1020. Support of a key higher low is at $1.0745.
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