The EUR/USD currency pair remains under the spotlight as traders focus on critical technical levels and ongoing market momentum. Following a notable 0.5% gain in the previous session, EUR/USD edged lower during Asian trading hours, hovering around 1.1710.
Despite this minor pullback, technical indicators suggest that the bullish bias continues to dominate, with price action remaining firmly within a well-defined ascending channel. Viktor Orlov, an expert at AureliusHub, explains the key elements of this issue in detail.
Technical Overview: Bullish Momentum Persists
On the daily chart, EUR/USD exhibits signs of sustained upward momentum, supported by a series of higher highs and higher lows within the ascending channel pattern. The 14-day Relative Strength Index (RSI) is currently positioned above the 50 mark, indicating continued positive momentum in the short term. This key momentum indicator suggests that the pair retains strength despite minor corrective movements.
Additionally, the pair trades above the nine-day Exponential Moving Average (EMA), which confirms that short-term bullish momentum remains intact. Traders often monitor the EMA as a dynamic support level, and its alignment with the ascending channel’s structure reinforces the overall uptrend.
Immediate Resistance Levels
Looking ahead, EUR/USD could test near-term resistance at the six-week high of 1.1789, recorded on July 24. Should the bullish momentum remain firm, the next target lies at 1.1830, a level not seen since September 2021. The upper boundary of the ascending channel around 1.1870 also represents a significant technical target, where profit-taking and supply pressure may emerge.
Monitoring these resistance levels is critical for traders aiming to capitalize on short-term bullish trends. A clear break above 1.1789 would likely attract additional buying interest, potentially paving the way for an advance toward the upper channel boundary.
Key Support Zones
On the downside, immediate support is identified at the ascending channel’s lower boundary, near 1.1690. This level aligns closely with the nine-day EMA, currently at 1.1666, providing a strong confluence zone for buyers. A rebound from this area would likely maintain the upward trajectory, reinforcing the bullish outlook.
However, a decisive break below 1.1690 would signal a potential weakening of short-term momentum, exposing EUR/USD to further downside risks. The next critical support is located at the 50-day EMA around 1.1585, followed by the two-month low of 1.1391, established on August 1. Breaching these levels could indicate a trend reversal and encourage short-term sellers to increase their positions.
RSI and EMA Dynamics
The combination of the RSI above 50 and EUR/USD trading above the nine-day EMA highlights that bullish conditions remain intact. Traders often interpret the RSI as a measure of market momentum; levels above 50 generally indicate buyer dominance, while levels below 50 suggest selling pressure.
In the current setup, the RSI reinforces the broader uptrend, signaling that the recent dip to 1.1710 may present a buying opportunity near the lower channel boundary.
The EMA, on the other hand, acts as a dynamic support line, responding to recent price changes more rapidly than the simple moving average. Its current positioning under the pair adds technical confirmation to the bullish narrative, making it a critical level for intraday and swing traders.
Ascending Channel Structure
EUR/USD’s ascending channel is a key element in the ongoing price analysis. The channel’s lower boundary provides reliable support near 1.1690, while the upper boundary near 1.1870 represents a potential resistance cap. Trading within this channel suggests that trend-following strategies may be effective, with traders targeting support and resistance levels for entries and exits.
A channel-bound approach allows for risk management, with stop-loss orders strategically placed just below the lower boundary to protect against sharp downturns. Similarly, take-profit levels near the upper boundary can help traders capitalize on short-term rallies.
Conclusion: Key Levels to Watch
EUR/USD continues to exhibit a bullish bias, underpinned by a strong RSI, consistent EMA support, and the ascending channel pattern. On the upside, traders should watch 1.1789 and 1.1830, with the upper channel boundary at 1.1870 serving as a potential medium-term target.
Conversely, support is concentrated near the lower channel boundary at 1.1690, reinforced by the nine-day EMA at 1.1666. A break below this zone would increase the risk of a deeper pullback toward the 50-day EMA at 1.1585 or even the two-month low of 1.1391.
Overall, the EUR/USD price trajectory is currently bullish, with traders focusing on technical levels, momentum indicators, and support/resistance zones to guide strategic decisions. Maintaining awareness of these key points will be crucial as the pair navigates short-term fluctuations and tests significant boundaries within the ascending channel.
