FX.co ★ EURUSD remains in bullish trend but could see early pull back next week

EURUSD is breaking to new short-term highs. Price is in a bullish trend and is making higher highs and higher lows. EURUSD has reached a major resistance trend line while the RSI on a daily basis is now in overbought levels. A pull back is justified early next week.

Red line - major resistance trend line

Black lines- bearish channel

EURUSD has reached the major resistance trend line. The RSI is at overbought levels. Price will most probably pull back next week after the sharp rise from 1.09 to 1.13. EURUSD should normally pull back towards 1.12-1.1150 area. Such a pull back would not do any harm to the bullish case.

EURUSD is expected to pull back towards the 38% Fibonacci retracement area. EURUSD will most probably pull back towards the rising tenkan-sen (red line indicator) and the kijun-sen (yellow line indicator). For now these two indicators provide support at 1.1120-1.11 near the upper cloud boundary. It is common to see prices pull back for a back test after a cloud break out. However I do not believe at this stage the pull back will be so much deep. There is no bearish divergence even in the 4 hour chart and that is why I believe any pull back will be short-lived.