EUR/USD Testing Key Resistance of 1.3240

EUR/USD (daily chart as of July 25, 2013) broke out above the pennant pattern on July 22, and touched the high of 1.3255 on July 24, 15 pips above the 1.3240 key resistance. Today price tested 1.3165, right at the lower boundary of the pennant pattern. The pair needs to have a stronger close above 1.3240/55 for more upside momentum to test 1.3400, which is around the major long-term downtrend line extending back to 2008, and also close to the projection target for the pennant pattern.

If price is unable to clear the 1.3240/55 resistance, it could keep testing the lower boundary of the pennant pattern. In the event of a break below that lower boundary, the pair could turn down and find support at 1.3060 (July 18 low), and potentially retest the key 1.3000 level. Note that the daily momentum indicators are bullish: the MACD indicator has a bullish crossover from below zero, and both the MACD and the signal line are above zero now; the RSI is rising and well above 50.