Euro is trending upwards the last month and is now challenging the previous 3-month high at 1.3025. However a major resistance level is to be verified at 1.3250, which was the resistance level when EUR/USD was dropping fast in the first months of 2010. Usually a resistance level becomes a support level when overcome, and 1.3250 is a support level if we are accepting that the currency pair is still in a long term downtrend. However there are quite a few signals that EUR/USD downtrend has reached rock bottom at 1.19 in June and considering the Euro’s last month uptrend, we’d better expect an imminent high above 1.3025 and a real challenge at 1.3250. Should we expect a retracement there and an uptrend resume, or would EUR/USD fall back to 1.20 level?
According to the EUR/USD daily chart, there was a Fail bottom in late June, a MACD divergence in early June and now the currency pair’s price is above the moving average. However it will soon reach the overbought level and combined with the fact that it will happen at the strong resistance level at 1.3250, we must expect a big fallback, at least to the moving average level.
Until then though, EUR/USD looks like breaking above 1.3025 the following days and in that case the currency pair will most probably rise up to 1.3250 unchallenged. Are you going to take your profits there, or do you expect Euro to climb much higher?