EURUSD has been lacking direction in recent weeks, unable to muster a convincing rally or a convincing break lower, according to Tony Sycamore, Market Analyst for City Index. He says, however, there are some possible clues as to a future direction.
Marginal new lows at 1.1763 have been accompanied by bullish divergence via the RSI indicator and a loss of momentum daily candle (Chart 1). Sycamore says that should EURUSD hold support around 1.1760 and recover above resistance at 1.1830/50, it would warn that a recovery initially back towards the 200-day moving average at 1.2000 is underway. In contrast, a daily close below support at 1.1760 would warn of a retest of the March 1.704 low.
Sycamore’s longer-term view is that EURUSD remains neutral while below monthly resistance at 1.2350/1.2550 (Chart 2)