EURUSD Warning Signs

EURUSD is making a comeback for the past few trading days.  It has risen above its 20 day moving average which is a positive indication.  The MACD indicator is still above its signal line showing that bulls still have the upper hand.  But we should not lose sight of the big picture.  If you look at the down swing from 25 Nov 2009 to 7 Jun 2010, the currency pair traded from its low in Jun 2010 to re-trace around 61.8% of the complete down swing.  This coincides with the Fibnoacci Retracement rule and it still shows that the long term trend for this currency is still to the downside.  However, we cannot ignore the fact that the currency is making higher lows and higher highs for the past few months.  The danger is for the currency pair to fall below 1.30 level.  This will violate the higher high and higher pattern.  The 2 day RSI is approaching overbought levels and we will likely see the price testing its 20 day moving average in the next few trading days.