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The weekly chart of the EUR/USD pair shows that it is approaching a strong overbought area and a technical reversal.
A technical correction is likely to occur in the coming days if the euro manages to cover the gap left on February 20, 2022, around 1.1271.
The euro is currently sitting above the 200 EMA and above the 200 EMA and within an uptrend channel. Should the euro find a rejection below 1.1291, the level where the +2/8 Murray line is located on the daily chart, this would be seen as a signal to sell.
In the next few days, we expect EUR/USD to cover the GAP around 1.1271. It will be the target of the currency pair as it has a few pips left to reach its target. After this happens, we could expect a strong technical correction towards the bottom area of the uptrend channel around 1.0790.
The scenario could develop differently if the euro breaks sharply the uptrend channel and consolidates below 3/8 Murray located at 1.0742. Then, EUR/USD is likely to approach the 1.00 parity zone in the medium term and even could reach 0.9767 (2/8 Murray).
On the other hand, in case the euro continues its bullish bias above 1.1300, the instrument could quickly accelerate its rise to 1.1480 and even towards the psychological level of 1.15.
Our trading plan for the next few days is to wait for the EUR/USD pair to reach the 1.1271 or 1.1291 zone, to sell with targets at 1.1070 (200 EMA) and 1.0810 (bottom uptrend channel). The Eagle indicator is in the strongly overbought area. The odds are that a technical correction will occur in the next few days.
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