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- EUR/USD in recovery mode again

- Momentum indicators supportive

- Final target at channel top possibly at 1.1300.

The Euro-Dollar exchange rate has recorded three consecutive days of advance, suggesting a possibility that the Euro is “putting together another recovery,” says Richard Perry, a market analyst at Hantec Markets.

However, the analyst cautions bulls that the gains might be allowing sellers the opportunity to reload ahead of another deeper move lower.

“This is a near term recovery within a medium-term bear market,” says Perry.

“After two days of positive candlesticks, the Euro is looking to put together another recovery,” says Perry. “A move back above $1.1175 is encouraging and the bulls will now look to pull the market through $1.1210 (another old low) as the next step in the improvement.”

Image courtesy of Hantec Markets.

Perry added that “momentum indicators are responding, with the Stochastics crossing higher (a near term positive signal) and RSI above 40,” and RSI momentum indicator is still supporting the recovery after showing a sharp upturn on the daily chart.

The recovery rally may not last, however, as the medium-term trend is still bearish, as evinced by the descending channel.

“It is likely to be the source of the next chance to sell,” says Perry, who earmarks the lower high at $1.1265 under the $1.1325 key lower high from April, as places where bears might start trying to push the market back down again.

The 1.1300 level of the top of the declining channel and the 50-day MA in the 1.1270s are two other key resistance levels where the market could be at risk of pivoting lower again too.

The decline in EUR/USD was unexpected as the pair was in a firm short-term downtrend as it fell from the previous touch of the top of the channel, however, given the channeling nature of the market and the fact it was close to the lows of the channel at 1.1075 at the end of last week there was also always going to be a chance of a rebound too.

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