Bottom line: EURUSD structure should remain constructive for bulls as long as it stays above 1.0636 levels. Resistance is seen close to 1.1500 mark, and a break higher would confirm the beginning of a potential trend reversal.
Technical Analysis:
EURUSD has staged an impressive rally all through last week after printing fresh lows at 1.0636 on March 23, 2020. The entire drop from 1.2555 through 1.0636 could be seen as a complex correction, which might have finally terminated. Bottom line for EURUSD bulls to remain in control is that prices must stay above 1.0636 lows.
A classic Engulfing Bullish candlestick pattern has been produced on the weekly chart for EURUSD, indicating a potential reversal ahead. Please note that immediate price resistance in daily price chart is close to 1.1500, March 09, 2020 highs. A break above that should be constructive for bulls, as they remain poised to continue higher.
Also note that the downtrend line passing through 1.2555 highs over a period of 2 years would break if bulls manage to take out 1.1500 resistance. This could indicate a potential trend reversal and EURUSD might be headed towards 1.2000 and higher levels.
The fibonacci 0.618 retracement of the entire drop between 1.2555 and 1.0636 is seen around 1.1900/10 levels, which is close to 1.2000 levels. A bearish reaction might be possible around those levels.
The wave structure from 1.2555 until 1.0636 might still be considered to be corrective, and hence a bullish reversal cannot be ruled out. Most traders might be willing to initiate long positions around current levels (1.1080), with a protective stop at 1.0636 and projected targets around 1.1500, 1.2000 and higher respectively.
Overall, EURUSD could be turning a potential buy on dips as traders prepare to take out 1.1500 handle before producing a meaningful pullback.
Prepared by
Harsh Japee, Technical Analyst.
EURUSD Chart
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