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EUR/USD rebounds from the downtrend line

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EUR/USD rebounded from near the near-term downtrend line, but the advance paused slightly below the 1.1540 (R1) resistance area. A clear move above that area is likely to confirm a forthcoming higher high on the 4-hour chart and perhaps challenge the 1.1650 (R2) obstacle. Our daily momentum studies support further upside extensions. The 14-day RSI moved higher after exiting its oversold territory and is now approaching its 50 line, while the daily MACD edged higher after crossing above its trigger line. As far as the broader trend is concerned, the price structure still suggests a longer-term downtrend. EURUSD is printing lower peaks and lower troughs below both the 50- and the 200-day moving averages. Therefore, I would treat any possible upside extensions of yesterday’s rebound as a corrective phase before sellers pull the trigger again.

• Support: 1.1260 (S1), 1.1100 (S2), 1.1020 (S3).

• Resistance: 1.1540 (R1), 1.1650 (R2), 1.1730 (R3).

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