Or will the downtrend continue?
The euro has rebounded well against the dollar over the last week as risk appetite has modestly improved but it’s already running into some trouble.
The pair has been in a long-term downtrend and we could soon see if that is set to continue. It has run into resistance around 1.1150 where prior support and resistance coincides with the 50 fib level – February highs to March lows.
This also coincides with the mid-point of the descending channel which altogether makes for an interesting potential rotation point, if the longer-term trend is going to continue.
A move above here doesn’t enormously change that and only a break through the top of the channel strongly indicates a change of direction, even if that would initially be considered a correction.
Other resistance levels could be interesting in the interim, including 1.1230 where the 61.8 fib coincides with the 55/89-day SMA band.
But a rotation at the 50 fib could suggest that the trend remains strong a could signal more pain ahead for the pair.
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