The pair is currently in a trading range correction, confined between two trend lines (shown in blue on the monthly chart), starting from April 2008. The lowest correction level (in June 2010, a morning star candlestick pattern) is positioned at the 50% Fibonacci retracement, drawn from the low in October 2000 to the high in April 2008. The pair’s recent pullback occurred after another attempt in February 2013 to challenge the upper trend line. The last attempt was a false breakout which occurred in April/May 2011, confirmed by a dark cloud candlestick pattern.
EUR/USD Daily (as of 5/31/13):
The pair is trading above a temporary uptrend line connected the November 2012 low, the March 2013 low, and the May 2013 low. The candlestick pattern that formed on May 28th and May 29th is a potential bullish engulfing pattern, and the strength increased with a strong bullish candlestick which followed on May 30th. The RSI on the daily chart is trading in a narrowing range, and currently is trying to close above 50, approaching the downtrend resistance line to the upside.
Trading Strategies:
Bullish, if the daily uptrend line holds.
1st resistance: 1.3240 (previous high on May 1, 2013)
2nd resistance: around 1.3400/3430 (the monthly downtrend resistance line)
Bearish, if price breaks down below the daily uptrend line.
1st support: 1.2750 (low in March/April 2013)
2nd support: 1.2660 (low in November 2012)
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