EUR/USD 1H chart 1/29/2013 9:45AM EST
Consolidation: The EUR/USD failed to extend after breaking above a small flag pattern during the 1/28 US session. The consolidation high held, and price came back to crack its consolidation low during the 1/29 European session. During the 1/29 US session it surged from the new low, to a new high, breaking above the consolidation high.
Momentum: Note that the 1H RSI reading held above 40, reflecting maintenance of bullish momentum. With it going above 60, it is a sign of bullish momentum revival.
Target: 1.35 will be a key psychological handle to break for further bullish outlook. If this is the case, taking the width of the range, a conventional breakout target projects to about 1.3530. Note the mini-consolidation in the middle of the range. This is the central pivot area. If there is a throwback, and the market can stay above this area (around 1.3450, then the bullish outlook still looks good. Otherwise, we might have a false breakout to the topside.
If the bullish break does occur, I suspect there are many stops up here since it is just above the 2012-high. If so, and these stops get triggered, we can get quick a pop before a throwback. Let’s see.
The EUR is very strong right now. You can see EUR/JPY also trying to break out of its flag pattern.
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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