The euro is getting ready to test the area of psychological resistance 1.2000-1.2009, which almost for sure will meet the major with massive limit sell-offs (including profit taking by buyers). Thus a scenario of downward reversal from this zone appears the most viable. However it’s not the only option: we need to note that ADX grows allowing bulls to reckon on the break of 1.2009 and extension of growth.
Locally the pair has signs of overbought conditions that also speaks for reversal from the closest strong level and 1.2000 is undoubtedly of that kind. Nevertheless bullish potential is in place so far, therefore we need to wait for market’s reaction on the 1.2000-1.2009 zone in order to make further assumptions.
On the hourly chart strong overbought conditions can be observed as well, which drove to the forming of bearish divergence between the price chart and RSI oscillator. This much complicates bulls’ task to overcome the barrier in the shape of 1.2000 level. And, as a consequence, it makes more likely a scenario of downward reversal. Target levels for sellers are 1.1956, 1.1935, 1.1927.
Main scenario: Growth to 1.2000-1.2009, then decline in direction 1.1956, 1.1935.
Alternative scenario: Break of 1.2000-1.2009 and growth to 1.2100.
Shorts from 1.2000-1.2009 to 1.1956, 1.1935.
In case the price settles above 1.2009 - longs to 1.2100.