The EURUSD has found support against the 1.2883-89 area where the 100 bar MA and the 38.2% of the days range was found (see previous post). The market did what it was supposed to do on the first test at least. Can the momentum higher continue? Holding the targeted 61.8% retracement of the 2012 high to low trading range at the 1.29333 level likely made traders more cautious about the upside (i.e., they may like to see what the Fed does). So I would think that there should be more profit taking on rallies with 1.2905, and 1.2915 as levels to eye for selling clues. Stay below and there could be a further rotation down through the below support.
If the 1.2915 is broken above the 1.2933 key retracement level will be eyed once again (see daily chart below). On a move above the retracement level I would expect further upside momentum as traders short cover. The next key targets will be the 1.2971, followed by the 1.3000 area (up to 1.3005). Above that there remains a gap on the daily chart from May 4th. On that date the low was 1.3080. The following week the high came in at 1.30637. The gap has not been filled. Don’t all gaps get filled? Eventually, they say. Keep the area in mind.
