EUR/USD (daily chart) as of April 12, 2013 has stalled its climb of the past week around the 38.2% Fibonacci retracement level of the two-month bearish trend from early February to early April. This bullish correction reached a high yesterday around the 1.3138 level before stalling its climb. Not only is this price resistance area around the key 38.2% Fibonacci level, it is also in the region of the 50-day moving average.
Having bumped up against this tentative resistance, EUR/USD may be exhausting its rally. A breakdown below the key 1.3000 level would provide some confirmation of this exhaustion, and an indication that price could be looking towards a resumption of the bearish bias that has been in place since the beginning of February. In this event, a key downside objective remains around the 1.2650 level. A breakout above yesterday’s high could extend the current bullish correction towards 1.3300 resistance.
James Chen, CMT
Chief Technical Strategist
City Index Group
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