The currency pair is currently trading at 1.3380 – down nearly 300 pips from the high of 1.3362 hit in January.
Despite the pullback, the technical chart remains constructive, as the pair bounced up from the 5-month moving average (MA) of 1.3280 earlier this month, reinforcing the bullish view put forward by that ascending average.
As seen above, the pair created another bullish higher low along the ascending 50-month MA in February (marked by arrow), validating similar higher lows created along that average since September 2017 and the golden crossover (a bullish cross of the 50- and 200-month MAs) confirmed in April 2017.
Further, the 100-month MA is about to cross the 200-month MA from below. That would only strengthen the bullish setup indicated by the flag breakout – a continuation pattern which accelerates the preceding bullish move – witnessed in October 2018.
As a result, the spot looks set to retest the December high of 1.3662 in the next month or two. A break higher would solidify the flag breakout and allow a rally to 1.40.
The bullish case would weaken if and when the pair finds acceptance below the ascending 50-candle MA, currently at 1.3054.
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