Technical analysis: EUR/USD prods past 50-MA and makes headways into cloud

Anthony Charalambous, CFTe XM

EURUSD is testing the 100-period simple moving average (SMA) at 1.1620, which coincidentally is blending with the Ichimoku cloud’s upper band, after the pair produced some positive impetus off the near 15-month low of 1.1523. The negative bearing of the 50-period SMA has stabilized, showing an easing in downward forces, while the falling 100- and 200-period SMAs are defending the bearish trend.

The Ichimoku lines have yet to verify the growing positive momentum, while the short-term oscillators are demonstrating a persistent bullish drive in the pair. The MACD is strengthening above its red trigger and zero lines, while the RSI is battling to reach the 70 level. The stochastic %K line appears to be trying to dip below the %D line in overbought territory. That said, the oscillator is not suggesting that positive price pressures have abated.

If the current trajectory is maintained, initial upside limitations could arise from the 100-period SMA at 1.1620, residing at the cloud’s upper boundary, and the 1.1640-1.1667 resistance barricade. Should these obstacles fail to cap additional price gains, the bulls may lift the price to test the 1.1689 high and the looming 200-period SMA at 1.1716. Successfully overstepping the 200-period SMA, buyers could then steer for the 1.1749 border before challenging the 1.1789-1.1800 resistance band.

Alternatively, preliminary tough support could transpire from the region of the 50-period SMA at 1.1569, which contains the cloud floor and where the Ichimoku lines are converging. If sellers drive the price down, the 1.1523-1.1535 area formed by the recent lows may then try to halt the resumption of the decline. From here, a deterioration of the 1.1500 barrier as well could result in a price dive with sellers targeting the 1.1400-1.1424 support section.

Summarizing, EURUSD’s short-term picture remains negatively skewed as long as the price remains below the 1.1640-1.1667 border.

Author

Anthony Charalambous, CFTe

Anthony Charalambous joined XM in 2019 and specializes in preparing daily technical analysis, using his years of trading experience to provide detailed forecasting for all major asset classes such as forex, indices, commodities and equities.

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