EUR/USD Candlestick Analysis: Euro Bounce Seen Ahead

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Talking Points:

• EUR/USD Strategy: Flat, Waiting to Short
• Positive RSI Diverge Hints at Gains Ahead
• Recovery Sought for Selling Opportunity

The Euro may be preparing to launch a more significant upward correction against the US Dollar. The pair has completed its first series of three back-to-back weekly advances in a year, hinting sellers may be growing reluctant keep the exchange rate under pressure after prices sank to the weakest since September 2003. Positive RSI divergence reinforces the case for ebbing downside momentum.

Weekly resistance comes in at 1.1519, the 14.6% Fibonacci retracement, with a break above that exposing the 23.6% level at 1.1780. An advance is likely to be corrective, both in terms of the long-term down trend dating back to April 2008 as well as our fundamental outlook. With that in mind, we will look for a bounce to run its course and monitor positioning for an on-coming selling opportunity.

Weekly Chart - Created Using FXCM Marketscope

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com