(Technical change on this timeframe is often limited though serves as guidance to potential longer-term moves)
Following the break of long-term trendline resistance (1.6038) in July, and subsequent break of supply from 1.1857/1.1352 in August (2020), a modest correction surfaced. However, buyers making an entrance in November and December (registering fresh multi-month highs) reasons additional upside may be on the horizon, with ascending resistance (prior support – 1.1641) perhaps targeted.
The primary uptrend has been in play since price broke the 1.1714 high (Aug 2015) in July 2017.
Brought forward from previous analysis –
EUR/USD consolidates just ahead of a descending wedge pattern’s (1.2011/1.1612) take-profit target at 1.2318 (yellow). Traders will also note there is room to advance until reaching the bullish flag’s (1.2177/1.2078) take-profit level at 1.2384 (purple).
Trend on this timeframe remains decisively north, launching a series of higher highs and higher lows since March 2020 (secondary trend). However, the RSI also merits attention, with the value producing bearish divergence around overbought territory.
Despite a fleeting visit south of 1.2255 support, the pair settled above the level on Tuesday, boosted on the back of a decaying USD. Violating recent multi-month pinnacles (1.2310) could have buyers address supply from 1.2351/1.2333, positioned just above the daily timeframe’s descending wedge pattern take-profit target at 1.2318.
The 1.23 level remains a central theme on the H1 chart, recently welcoming its fifth test in under a week.
1.23, according to what we’ve seen so far, is on the brink of allowing buyers to push through and perhaps reach for 1.2350 resistance. December’s reaction fell approximately 100 pips, though January’s response struggled to pass 1.2250 support. By and of itself, this implies buyers are likely controlling the majority of intraday action right now.
With reference to the RSI indicator, the market trades above 50.00, suggesting short-term momentum is headed for overbought levels.
Breaking above 1.23 on the H1 will likely be a welcomed sight for breakout buyers. Although H1 shows resistance is not expected until 1.2350, it should be noted 1.2318 (daily timeframe’s descending wedge pattern take-profit target) and the lower side of H4 supply at 1.2333 could be problematic.