EURUSD was forming last week a bullish RSI divergence. As we mentioned in our analysis, price justified a strong bounce towards 1.1750-1.18 as a back test of the major resistance neckline of the Head and shoulders pattern. Today the week starts exactly as we expected, with a strong EURUSD moving higher.
Blue lines - Fibonacci retracements
Green line- major neckline resistance (previous support)
EURUSD is moving higher for the second session in a row. The RSI has already warned us of a coming bounce as it did not follow price to lower lows. The bullish divergence was an important warning given to traders last week. This week starts with price above 1.17 and if this upward move continues, we should expect at least a move towards 1.1770 and the green neckline. Next resistance level is at 1.18 and if broken we should then move towards the 38% Fibonacci retracement near 1.19.
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