EUR/USD climbed above the 1.4844 peak that it reached three weeks ago but didn’t get far away. 1.4908, just above it, was a peak at the beginning of the year. Did EUR/USD make a breakout and is doing it slowly? Or did it just get closer to the resistance line, where it can bounce back down?
EUR/USD enjoyed the dollar’s weakness on Tuesday and managed to trade above the peak of 1.4844 that was reached on September 22nd.
This came despite bad fundamentals: the important ZEW Economic Sentiment fell both in Germany and in all of Europe. Economists were expecting a better sentiment this time.
After climbing above 1.4844, EUR/USD traded just under 1.49. Casey Stubbs and Mohammed Isah both see 1.4844 as an important resistance line, and see the move as a breakout. They both have interesting technical analyses I recommend reading.
But I think differently. I see the 1.4908 line as more important. When EUR/USD began tumbling from above 1.60 last summer, the first attempt to go back up was stopped at 1.4908. It then fell up to 1.3880 before making a second attempt after Lehman’s collapsed, and it also bounced near that spot.
The second reason for looking at 1.4908 as the more important line is the character of the last breakout: it wasn’t convincing. EUR/USD. The initial rise to 1.4876 was followed by a fall to 1.4800. The next move was also slow.
The third reason for looking at this line is today’s trading: European Industrial Production rose by 0.9%, exactly as expected, and didn’t influence EUR/USD. The peak today was at 1.4913, at the resistance line. Since then, EUR/USD is stuck. I see it “stuck” under the resistance line.
I guess that there are more opinions out there. What do you think? Did EUR/USD make the breakout, or did it just get closer to the resistance line, where it can bounce back?
For further reading: check out the EUR/USD Weekly Forecast.
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