The EUR/USD is trading on a very bullish stance as we head into the opening of the European session. Currently at 1.0682, the pair is back to the 28 November highs. The 1.0680 levels were the highest reached after the yearly lows were made on the third week of November and a recovery commenced immediately. The big question in the many trader’s minds has been about whether this recovery will continue some more or if an even greater challenge can be made on the same lows.
EUR/USD Technicals levels
We have plotted Fibonacci levels between the 28th November top where the recovery ended (1.0685) and the most recent swing slow on 30th November (1.0551). The current price action clearly shows on the H1 chart that the 61.8% level had been a tough resistance on 1st December but was broken towards the close of the US session on the same day. The price has slowly shot back to the top of the range, slightly penetrating the 100% mark. One candle has already failed to penetrate the level, but a successful candle would make bulls even more excited.
If that EUR/USD rally is to resume, the next crucial level is at 1.0750, last reached on November 17th. The Moving averages still show a very high likelihood of the trend continuing higher with the 55MA now stretching slightly further above the 200MA. The 55MA is slowly angling at a steeper angle North while the bars are now piercing the upper Bollinger bands® with even more ease. Traders would be looking to have more than one green candle closing above the 100% level to confirm the possibility of an impending dash back to the 1.0750 level reached mid November.
Image source: MetaTrader with MT4 trend indicator set to 55/200 MAs and Fibonaci levels.
Fundamental challenges that should keep bulls cautious
With the Nonfarm Payrolls being announced later this Friday, traders may be cautious about the outcomes of the employment news before the close of the week. There is a chance that whipsawing and possibly some weakness may be seen around the time the news is released. However, the daily candle also looks strong and a positive outcome from the news wires would still mean a bullish stance will still set the tone even if a price drop is seen in the interim. The higher highs patterns set on the charts recently also justify treating the current bottom as a formidable one. The current bottom 1.0585 also coincides with the 23.6% Fib level.
Avoiding the pair till the NFP release or strictly buying the dips only is recommended at the moment.