EURUSD Holds Its Resistance
1.1135 remains as resistance as buyers fail to morning rally.
Taking a look at the daily EURUSD chart, we can see a possible stall starting to develop on the current rally. Last week the E/$ surged, adding 4.07% and jumping back above 1.1140. This move broke the fast downtrend and sparked the idea that a new trend could be forming to the upside.
For this to be confirmed, the next leg lower will need to answer a few questions about the current rally. We would like to see the pullback finish around a normal trend level. You can see these points on the Fibonacci retracement tool. 61% is also acceptable but we’ve seen cases where momentum can decrease once it goes that deep. 50% is a nice midpoint as it gives the move time and maintains a good level for holding momentum. A move below 61% starts to put more favour in sellers and they might start looking for new lower highs to signal a new leg lower.
The overall picture points to the rally still continuing to be impulsive due to its shape. We are looking at the possibility of a new lower high that could set up a medium-term trend continuation. For now, attention will remain on the current phase of short-term selling.