EUR/USD bulls cannot be stopped
2023.01.23 10:54
EUR/USD bulls cannot be stopped
After slowly breaking out of its weekly range earlier today to reach a new nine-month high of 1.0919, EUR/USD is hoping to begin a new bullish cycle.
The technical indicators indicate that the odds are stacked in the bulls’ favor. All of the exponential moving averages (EMAs) are rising, with the 50-day and 200-day EMAs recently displaying a distinct golden cross for the first time since June 2020. This is a strong indication that the four-month-old uptrend may continue to improve. The MACD and the stochastic have yet to exhibit any signs of weakness, despite being close to their overbought levels in the momentum indicators.
The rise may continue toward the key resistance line seen around 1.1050 unless the 50% Fibonacci retracement of the 1.2348-0.9535 downleg blocks the way higher at 1.0940. A little bit more, there may be some congestion in the Q1 2022 constraining zone of 1.1120-1.1185. The next stop may be around the 1.1270 barrier if this proves to be simple to overcome.
The focus will shift to the 1.0786 base if the pair falls below 1.0870 and returns to the weekly range. Note that the 20-day EMA is getting closer to that region. Therefore, a rapid decline toward the 38.2% Fibonacci level of 1.0600 may result from a failure to recover here and a decisive close below the psychological mark of 1.0700, which served as resistance at the end of December. The broken upward-sloping line at 1.0500 and the 50-day EMA will then be the focus, while the broken long-term resistance trendline from May 2021 close to 1.0400 may also be important to watch.
In conclusion, EURUSD buying pressures are expected to persist in the short term, though a consolidation around 1.0940 before the significant bar at 1.1050 can be seen is not out of the question.
