- EURUSD bounces higher as positive bias gains traction
- Price climbs above moving averages and ascending trendline
- But how convincing is this rebound?
EURUSD is marching higher, pushing above its simple moving averages (SMA), but more importantly, the price action has moved back above the short-term ascending trendline.
The momentum indicators are strongly bullish with the stochastic oscillator plotting higher, while the MACD has just crossed above the zero threshold. Both are positively aligned with their moving averages, although the former is entering the overbought region.
Should the pair continue to head higher, the 23.6% Fibonacci retracement of the July-October downtrend at 1.0643 could obstruct further gains before revisiting the October peak of 1.0693. A successful climb above this top and above the 1.0700 level would open the way until the 38.2% Fibonacci of 1.0763.
However, if the rebound falters, the 100-period moving average, which has converged with the uptrend line, should provide immediate support in the 1.0575 region. Lower down, the proven support level of 1.0520 could halt steeper losses. Otherwise, a re-test of the early October 10-month low of 1.0447 could be on the cards.
To sum up, the short-term picture is looking increasingly positive, although surpassing the October high of 1.0693 would put EURUSD on a surer path upwards. But for the medium-term outlook to also switch to bullish, the gains would need to stretch further, at least until the 38.2% Fibonacci of 1.0763.