FX.co ★ EUR/USD

The rise of EURUSD towards 1.1965 region is an indicator of an investor market that is still securely entrenched within a large bullish trend formation against the US dollar. The price movement of the past few weeks has been one of steadily increasing highs and highs, an indication of upward trend in spite of occasional retrenchment. The recent trend which is pushing upwards on the Asian trading is an indication that buyers are still in the control and the market is still honoring any key areas of support which have been observed in the past consolidations. These supports as long as they are intact are in favour of additional efforts to the upside, and not a change of direction. Structurally, the rally that gained momentum past the 1.1800 area was a definitive escape out of a long consolidation level. This level has now been transformed into a significant medium-term support area, and the basis of the existing bullish bias. The smaller pullbacks down to the 1.1850-1.1880 have been small, and it indicates heavy demand on dips, plus the market is not in a ranging mode, but in a trending mode. The fact that price has been able to stay above these areas indicates that the sellers do not have the belief that they will be able to push the correction further. The region of resistance at 1.1965 is immediate resistance based on recent swing highs and short term exhaustions. This level has staged off progress in the near term such that it is a pivotal hindrance to the continuation by the bulls. An extended break and day ending above this area would reaffirm continuation of the trend and probably open the way to the psychological 1.2000 area. The 1.2000 handle is very psychologically determined, and it conformed to the historical price congestion, that is to say, it may initially become first to profit taking despite possibly being broken. In case the two are able to cross 1.2000, the subsequent upside conditions would probably appear at 1.2080 and 1.2150, the levels which were related to the previous distribution areas of the previous market cycles. These regions would be medium term resistance zones where the bullish momentum might stall or consolidate. The market however, as long as it is in the habit of making higher lows would still be in line with an energetic trend of bullishness and not a reversal. On the negative side, preliminary support is below the 1.1900, which is a round number that has been serving as a short term pivot in the recent sessions. One pullback to this would not be particularly a threat to the larger structure, as long as buyers support it on a closing basis. A slightly lower area of 1.1850 is a more critical area of support as the area is congruent with the former levels of breakout and the foundation of the latest impulsive rise higher. A further decrease of the price to less than 1.1850 per day would indicate a more serious phase of correction, as the emphasis would shift to the 1.1800 region. The level of 1.1800 is very crucial as far as the trend is concerned. It forms the old ceiling to the range of consolidation and it is now a structural floor. A sharp decline below this area shall break the line of higher lows and would indicate that the upward momentum is dying. Under such a situation, price would pull towards 1.1700 where there is more long-term support and past demand. But so long as 1.1800 holds, the greater bullish story holds true. In general, the technical outlook of EUR/USD is still on the higher side and price is comfortably above major supportive levels and in contact with the near-term resistance. The market seems to be consolidating around 1.2000, which has been usual before either a continuation break out or further but nonetheless a corrective pullback. Any confirmed break above 1.1965 would be significant in supporting an extension to 1.2000 and more whereas any retracement above 1.1850 will probably be seen as an extension opportunity as opposed to a indicator of a bearish market structure.