EUR/USD 4H Chart 11/7/2012 6:30AM EST
Pullback: The double bottom spotted yesterday (11/6) held and the EUR/USD built a rally from around the 1.28 handle. As the US election got underway and votes started to show an Obama victory, the EUR/USD extended higher. However, the pullback stalled in the European session, failing to reach a previous support pivot near 1.2880. The question for the 11/7 US session is whether it can hold above 1.28 for further consolidation, or will it give way to a bearish outlook.
At support: When we look at the daily chart we see the EUR/USD at support. Although the 1.28 psychological and previous support pivot was cracked, there is still a possibility its a clear-out, or false break. The daily RSI is at 40. In the bullish scenario, the market should find a bottom in order to hold the bullish momentum. In a consolidation mode, the market still should find a bottom soon, but the bullish outlook would be limited to when the RSI reaches 60. If the 11/7 US session can hold above 1.28, there is still upside toward 1.2950 in the very short-term within the scope of a bearish market in the short to medium term.
The bearish scenario however should pull the RSI below 40, reflecting loss of bullish momentum established but the bull run from July to October.
Bearish outlook: The bearish outlook opens up the 2012-low of 1.2042. We should also monitor 50% retracement at 1.2605, and 61.8% retracement at 1.2472 with a pivot around 1.2450. Ability to hold below 1.28 should help build the case for the bearish outlook.
EUR/USD Daily Chart 11/7/2012 6:37AM EST
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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