EUR/USD Technical Analysis: Bid above 1.12, focus on monthly close

• EUR/USD is hovering near 4.5-month highs above 1.12.
• A close above November's high would imply bullish breakout on the monthly chart. 

EUR/USD is currently trading at 1.1212, representing a 1.79% gain on a month-to-date basis, having hit a 4.5-month high of 1.1221 on Monday. 

The pair created a bearish inside month candle in November. That pattern occurs when the period begins with optimism but ends on a negative note and the trading range falls within the preceding period's high and low. 

The inside month candle indicates indecision or consolidation in a narrowing price range. Hence, a break above the candle's high is considered a bullish signal. 

So, a bullish reversal on the monthly chart would be confirmed if the pair closes Tuesday above November's high of 1.1176. That will likely yield a rally to levels above 1.14.

The short-term outlook would turn bearish if and when the pair drops below the Dec. 20 low of 1.1066, invalidating the bullish higher lows setup.

Monthly chart

Trend: Teasing bull breakout

Technical levels