FX.co ★ Sud | EUR/USD

EUR/USD pair is well established in a strong bullish trend, and the price movement has been increasing at a high pace after the recent dump of the dollar. The fact that the rise to five years high of almost 1.2082 confirms that the overall trend formation is unquestionably positive and that there has been an ongoing series of highs and highs on the daily chart. The latest rally seems more impulsive, implying that buying belief is high and the market is in a momentum phase and not a distribution phase. Structurally, the breakout over the last consolidation area between 1.1950 and 1.2000 was an important technical occurrence. It was a key supply region as this area had limited price increases on multiple occasions over the past few weeks. As soon as the price strongly penetrated this zone, stops must have been raised and contributed to a steep extension to the 1.2080 area. This action succeeded in turning this range of 1.19501.2000 into a major support area, which now forms the bottom of the present bullish leg. The directional momentum is high with the slope of the advance whilst being steep. Price has been regularly being found near session highs, which is traditional of a strong trend. No indication of long term bearishness has been recorded because the pullbacks have not been deep and long lasting. The indication of this behavior is a market that is demand-based as buyers intervene whenever there is slight decline as opposed to when there is a significant decline. The most immediate resistance is currently the psychological level of resistance of 1.2100. Although price has been rotating around the region just below this point, a clean daily close above 1.2100 will be the next structural breakout that would open it up to the higher resistance areas. The further resistance will be noted at 1.2100, then 1.2150, and 1.2200, which is not only psychologically important but also has a more extended historical context. Such levels will be prone to profit taking especially with the protracted nature of the present move. Momentum indicators uphold the bullish framework and point to the short-term risk. This Relative Strength Index that is trending into the high 70s is an indication of a very good upside momentum, but it is also an indicator that the market is about to hit the overbought level. Such high RSI values in the past do not always signal the termination of trends but instead can be precursors of tranquilizing or remedial drawbacks. Any hesitation or slight backsliding at these levels would be seen as a healthy thing to do technically, and no harm would be caused to the overall trend. On a negative side, the first support is the one that is distinctly at the 1.2000 psychological point. The zone is structurally significant as the point where the previous range breaks out and is in line with the strong market participation. Any continued premium above 1.2000 would reflect the buyers have the upper hand and that any weakness is on the correctional and not the trend-terminal scale. Any temporary drop under this point would not be the surest sign of a nullification of the bullish formation, although a daily close at this point would put more possibility of a further backtrack. The next support zone is below 1.2000 and is close to 1.1950. The level is a previous resistance layer, which has since become structural support of secondary nature. Any price acceptance below 1.1950 would indicate that the bullish momentum is waning in a more noteworthy manner and would perhaps pave the way to a test of the 1.19181.1900 area. This is an important region because it represents the high of last year and a past swing top hence a good technical floor of the rising trend. In the lower part, the support will be reached at 1.1834, the low on January 26. This level is the foundation of the latest impulsive higher leg. A shift toward this direction would suggest a much more profound fixation and a short run collapse in the bullish formation, but the long term designation would still be preserved unless lower lows start to develop. All in all, the trend structure of EUR/USD is still very bullish, as the price movement is backed by high momentum and definite higher-high structures. The upside roadmap of 1.2100, 1.2150 and 1.2200 and the support of 1.2000, 1.1950 and 1.1900 represent the important zones that need to be preserved to maintain trend integrity. The overall technical bias will continue to be in the higher direction as long as price does not fall below the previous breakout area despite any consolidation or corrective pullbacks that may occur in the short term with the overextended conditions.