(MENAFN - DailyFX) EURUSD CHART ANALYSIS: NEUTRAL Euromoves to 3-month high, menacing resistance above 1.14 figure RSI divergence, bearish candlestick pattern warns of downturn ahead Confirmation sought before an actionable trade setup is identified
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The Euro is attempting to make good oncompleting a bullish Falling Wedge chart formation , reversing higher form adeep corrective setbackto reach a three-month high against theUS Dollar . Breaking resistance marked by the June 7 swing top at 1.1348 has exposed the March 20 high at 1.1448. The seemingly more potent 1.1543-54 price inflection zone follows thereafter.
The case for lasting upside follow-through looks suspect however, at least for now. Negative RSI divergence warns of ebbing upside momentum even as the pair gains ground. A look at more immediate positioning on the four-hour chart also warns against bullish exuberance. It reveals a Bearish Engulfing candlestick pattern that might prove to be indicative of a top.
This too ought to be taken with a grain of salt. The immediate uptrend defined by a series of higher highs and lows set from mid-month remains intact, so any pullback from here might be no more than a correction before further gains. On balance, opting for the sidelines seems to be most prudent until signs bearish warning signs are neutralized or downtrend resumption is reasonably confirmed.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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