EUR/USD Daily Forecast – Euro Spike Above Major Resistance

The ECB Meeting Takes Place this Week, Will Bulls Hesitate?

One event standing in the way of a Euro break out this week is the ECB meeting. It’s been a while since the single currency gained as a result of the European central bank meeting, and I think bulls are aware of that.

It leads me to consider, that while the upward momentum is so strong, will the pair take a breather here? Especially when looking at how much overhead resistance is involved.

Technical Analysis

The daily chart shows resistance quite clearly at current levels. There is a downward trend channel in play that has encompassed price action for most of the year.

There is also the 100-day moving average which was tested today and is holding the pair lower thus far.

In addition to the above, there is a horizontal level at 1.1259. This level held EUR/USD lower on two attempts last month. It was also a major support level in February.

On a 4-hour chart, reversal signs are starting to appear. There are some candlestick patterns that show exhaustion near resistance. The last candle printed is a doji, suggestive of selling pressure considering its proximity to resistance.

The hourly chart shows a reversal pattern as the last three candles form an evening star pattern. I think there is a strong case for a technical reversal here, or rather a pullback after an impressive gain.

Another technical level in play today is the 161.8% Fibonacci extension of the correction that took place in late May.

The main support level, in the event the pair turns lower, falls at 1.1213. This level held the earlier rally as seen in the above chart.

I see further support just below 1.1200 at around 1.1195. In addition to the horizontal level, the 100 and 200 period moving averages on an hourly and 4-hour chart are seen converging near the level.

Bottom Line:

• Although EUR/USD shows strong upward momentum, it faces a major resistance confluence
• The ECB meeting on Thursday may cause bulls to hesitate in chasing the pair higher
• In the session ahead, I see potential for the pair to correct lower.