UOB Research discusses the technical outlook for EUR/USD and flags a triple moving average pattern on the weekly chart.
"In the weekly chart for EUR/USD, one can see that triple moving averages crossover is not common (we are using 21/34/55 period exponential moving average). In the past 6 years, there were only three instances of such occurrence. Moving averages crossover serve as a simple but effective signal of the start of a trend. ADX (average directional index) is a common indicator used for “measuring” the strength of a trend. A reading above 25 indicates the start of a trending move and the higher the ADX, the stronger is the trend (regardless whether up- or down-trend).
In Sep 2014, the bearish crossover in moving averages was accompanied by ADX moving above 25. As can be seen in the chart, the subsequent down-trend in EUR/USD was swift and impulsive and lasted for about 6 months. Similar set-up was seen in Jun 2017 and EUR/USD rallied hard and fast before topping out at 1.2555 in Feb 2018," UOB notes.
"On top of the bullish crossover in moving averages and strong ADX, EUR/USD is also approaching a 6-year declining trend-line resistance at 1.1635. A break of such long-term trend-line could potentially lead to a rapid upward acceleration in EUR/USD. Aside from moving averages and ADX, other technical indicators are also suggesting a higher EUR/USD from here.
Looking forward, if EUR/USD breaks above 1.1635, the next resistance levels are at 1.1750, 1.1830 and 1.1950. Support is at 1.1350 and the level where the three moving averages are clustered together now (around 1.1150) is acting as a key and crucial support," UOB adds.