EURUSD – bullish bias while above 10SMA, but risk of deeper pullback exists
The Euro is trading within narrow range in early Monday, but still above rising 10SMA (currently at 1.2413) which tracks the ascend and marks initial support.
Friday’s close in red after repeated rejection above 1.25 barrier and weekly close in long-legged Doji after six straight weeks of rally, could be seen as initial signs that bulls are running out of steam.
Overbought daily / weekly studies also warn of extended consolidation / deeper correction as dollar remains steady after receiving fresh boost from solid US jobs data which add on expectations of US rate hike in coming months.
Firm break below ascending 10SMA is needed to generate bearish signal and open way for further easing towards next pivotal support at 1.2300 (Fibo 38.2% of 1.1915/1.2537, 09/25 Jan upleg).
Extended consolidation with bullish bias remaining in play cold be expected while 10SMA holds.
Bullish scenario needs sustained break above 1.2537 (25 Jan peak) to signal bullish continuation and expose target at 1.2597 (Fibo 61.8% of 1.3992/1.0340 descend).
Res: 1.2466; 1.2490; 1.2522; 1.2537
Sup: 1.2424; 1.2413; 1.2334; 1.2300