The breakout above $1.1015 was a decisive moment last week on EUR/USD. In completing the upside break from the consolidation rectangle, the implied target was of around $1.1250. Into the European session this morning, the next step in this move is a decisive break above the resistance of the late March high at $1.1145. This resistance was tested almost to the pip on Friday before an intraday pullback. However, the bulls are a sturdy bunch these days and they are coming again this morning. Momentum is strong with this move, with RSI into the high 60s, whilst MACD lines accelerate higher and Stochastics are strong. However, some care needs to be taken with this move. In March, during a time of extreme volatility, the RSI went above 80. In more normal trading times, the RSI on EUR/USD will tend to struggle around 70. This may mean we begin to see the momentum of this bull run begin to ease. It may therefore mean that even if the euro can breakout above $.1145 resistance, upside potential may be limited before a pullback is seen. Whilst we are still bullish of EUR/USD, we are beginning to be a little more cautious of this bull run which has added c. +370 pips in just over two weeks. Support is strong around $1.1015 and the uptrend at $1.0950.
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