EUR/USD: The bull run continues [Video]
|EUR/USD
With the run of decisive positive closes higher on EUR/USD the bull run continues. The move has now decisively broken though the resistance of the late March high at $1.1145 to continue the impressive rally of the past three weeks. The original breakout above $1.1015 implied a move towards $1.1250 and this is still on the cards the way the market is moving. Momentum indicators are certainly with the breakout, with the RSI into the 70s, Stochastics strong and MACD lines accelerating higher above neutral. We still believe that the near term outlook is stretched though, as historically the RSI tends to struggle around the 70 mark and this is a warning for the current run. However, the strength of momentum and configuration of daily candlesticks (which have solid and strong positive real bodies) reflects the strength of the buying pressure. So drawing in a sharp uptrend which rises around $1.1160 today, this should be watched for potential reversal signs. It would only need a negative candle/close for this mini trend to be breached and warn of a corrective slip. For now though as the market again pushes higher, we are still happy to sit long. We are just cautious for profit-taking (especially with the ECB announcement on Thursday). We are also watching for the potential negative divergences on hourly chart (MACD especially), whilst hourly RSI below 40 would also be a warning. Initial support band $1.1080/$1.1145.
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