The EUR/USD finally broke above 1.21. This has been a major resistance area stretching from 1.2080 to 1.21, and has topped the uptrend twice in August and September of last year (this can't be seen on this chart.) Upon zooming out on the daily chart of your platforms, this is evident.
Buyers made a few attempts at this level earlier this month, but failed to break above it once again. As this pair reversed back down, it seemed that this level would hold again- but that was not the case. The stars aligned for buyers once more, and this time it seemed that EUR/USD would finally break the 1.21 level. Yesterday, this pair jumped approximately 130 pips from the 1.19 lows, which took us close to 1.21 again.
Yesterday, I mentioned that we may give the 1.21 a try on the short side, but this latest move was just one jump too many. When the price often approaches a resistance level, it is likely that it will be broken eventually.
The 20 SMA (grey) did a good job in providing support this week
The break doesn’t make much sense technically speaking, however, as I said, the stars aligned for this pair, as everything went in favour of the Euro and against the USD recently.
China is thinking of stopping the purchase of US treasuries, and the ECB (European Central Bank) minutes showed that the rhetoric will become more bullish. The US producer inflation yesterday was quite disappointing.
The price turned around yesterday, coming just above the 20 SMA (grey) on the daily chart, and EUR/USD headed for 1.21, as we mentioned yesterday. The 1.2080-1.21 will inevitably become a support if this pair slides any lower.
We may give it a try on the long side with a short term buy forex signal if the price dips down there today, so hang around guys- the stop would be below 1.2080, but let’s stay tuned for the retrace first.