EURUSD has been underperforming in the previous couple trading days, creating a pullback on the 3-year high, the 1.2540 resistance level. When looking at the bigger picture the pair holds a clear trend to the upside as it recorded the sixth bullish week in a row.
However, the short-term technical indicators are pointing for a correction to the downside. The RSI is above the 70-overbought level at 73, suggesting that the latest upswing may be running out of steam and that the risk of a near-term correction is high. Moreover, the stochastic oscillator posted a bearish crossover within the %K and %D moving averages, indicating bearish movement. The price hit the upper boundary of the Bollinger Band and failed to end a day above it.
Should price reverse lower, immediate support could come at 1.2160, which is near to the mid-level of the Bollinger Band. Below that, 1.2080 is another major support and is holding above the 9-month ascending trend line.
Conversely, to the upside, the next level to have in mind is the 1.2540 key level, while slightly above it, the next significant resistance is the 1.2570 taken from the high in December 2014.
