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Technical Update - EURUSD and Dollar Index breaking months long trendline. Trend reversal or just a correction? Technical Update - EURUSD and Dollar Index breaking months long trendline. Trend reversal or just a correction? Technical Update - EURUSD and Dollar Index breaking months long trendline. Trend reversal or just a correction?

Technical Update - EURUSD and Dollar Index breaking months long trendline. Trend reversal or just a correction?

Forex 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

EURUSD closed above months long falling trend line breaking above parity. Resistance at 1.02 and 1.0370 are in sight but can it reach them?
The Dollar Index has broken short-term rising trend line and could soon test month long rising trendline. Longer-term trend is still up but a larger correction should be expected 


EURUSD closed yesterday above its upper trend line in the falling channel going back till February this year now trading above parity. If closing above parity today and if RSI closes above 60 threshold the uptrend has been confirmed. An uptrend that has the potential to move to 1.02, possibly up to strong resistance at 1.0370

If EURUSD instead closes below parity and RSI fails to close above 60 selling pressure could resume

Source: All Charts and data Saxo Group

EURUSD closed yesterday above its upper trend line in the falling channel going back till February this year now trading above parity. If closing above parity today and if RSI closes above 60 threshold the uptrend has been confirmed. An uptrend that has the potential to move to 1.02, possibly up to strong resistance at 1.0370

If EURUSD instead closes below parity and RSI fails to close above 60 selling pressure could resume

EURUSD reached 1.618 projection of the 2020-2021 correction at 0.9576. Monthly RSI touched previous all-time lows and is currently trading around the middle line in the wide decade long falling channel. Resistance around 1.0350-1.0370 will be key for medium term outlook.

 The Dollar Index closed yesterday below short-term rising trend line and is currently testing support at around 110. A likely break could lead to a sell-off down to test the lower medium-term rising trendline.
If RSI closes below 40 threshold the medium-term trendline is to be tested and a move to key support around 107.67 is likely.  However, there is downside risk to 104.52 medium term.

Weekly chart has been showing divergence for several months. A correction was in the cards.
However, if Bears cannot push the Dollar Index below 107.67 a rebound should be expected.
A rebound that could turn in to higher levels.
Because from the monthly chart there is no RSI divergence and no strong resistance until around 121. The Dollar Index could perform a correction own to around 105 without demolishing the longer-term uptrend picture.

If monthly RSI bounces off 60 threshold the longer-term uptrend could resume towards new highs

 

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