EUR/USD: Downside correction before rally resumes

EUR/USD early March's daily chart is showing the pair is close to overbought conditions implying a correction is on the cards before the rally is resumed, Yohay Elam from FXStreet informs.

Key quotes

“EUR/USD has shot above the 50, 100, and 200-day Simple Moving Averages and the currency pair is enjoying upside momentum. On the other hand, the Relative Strength Index is flirting with 70 – entering overbought conditions.” 

“This technical situation implies a downside correction before the rally resumes. An extension of the upside move is supported by the break above the long-term downtrend support that accompanied the pair since early 2019.” 

“Support awaits at 1.1285, a resistance line from mid-2019. It is followed by 1.1240, December's peak.” 

“The first line of resistance is 1.1350, which capped EUR/USD around June. Next, 1.1405 was the summer's high point.”