- EUR/USD traded down near a key support zone and held before strengthening its bullish case in a big way
- Crossing into the 11900s is big, as it puts it above key resistance and has room to go when looking to the left
- New yearly high looks to be in the cards, perhaps as soon as this coming week
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Coming into last week we were looking for EUR/USD to possibly test, but not break, important bottom and top-side levels. On Tuesday, the euro came down very near the support-zone surrounding 11700 before launching higher. Friday’s rally did, however, see prices break on through resistance around the 11876-threshold (2010 low) which has been a big focal point since August.
Closing the day, week in the 11900s is important because it not only leaves the ‘head-and-shoulders’ pattern completely in the dust with a break above the ‘right shoulder’, but also opens up a path to the year-high at 12092. The area surrounding the 2010 low will once again go from resistance to a source of support. If the rally is to pick up steam, then we shouldn’t see a lasting move into the 11800s. Helping provide further support on any weakness is the tend-line off the month low, so even if a modest dip below unfolds there is trend support to help keep a bid in place.
Where could EUR/USD go if new highs for the year are scored? At that point, we have to start searching a good distance higher towards ~12500, where a trend-line passes down from the 2008 high. It is very unlikely we see such a sharp rally in the coming days develop, but could we see those prices in the coming weeks? Sure. But for now, keeping it one day and one week at a time. The focus will be on the aforementioned near-term levels, with a broadly bullish trading bias in place.
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4-hr (Short-term levels & lines)
---Written by Paul Robinson, Market Analyst
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