EUR/USD: 1.30 Holds; Assessing Reversal Clues

• 1H: Following the market after testing 1.30 last Friday, we see the market attempting to break this level again today. However, the 1H chart shows that after a strong rally in the European session, the EUR/USD stalled below 1.30, and the previous high.
• There is no reversal signal yet, but we may have some signals against the continuing bullish outlook.
• The RSI in the 1H did remain mainly below 60 after coming down from 1.30 the first time.
• Now, we need to see the RSI go below 40. Without a bearish signal the market is basically in a ranging mode between 1.30 and the 1.2870 low.
• To me, the rally is intact even with a lower low, if the market is supported above 1.2830 (61.8% retracement).
• A break below this can be seen as a sign that the reversal is underway.
• The targets for a decline are 1.25 and aggressively, 1.2150.
• Let’s take a look at the internals to assess the current possible topping action.

• 15m: The 15-minute chart shows the market rally sharply from the 1.2870 area in the European session. This shows inability of the market to sustain a bearish attempt. However, inability to break above 1.30 keeps the market in ranging action.
• At the moment, we are seeing a near-term congestion pattern forming just below the 1.30 level. So if a decline follows. check if it can break below the previous low at 1.2930.
• However, the market can be supported above the 61.8% retracement level if the bullish mode is still intact. A break below that suggests we may be forming a double top (seen in the 1H chart).
• For bearish confirmation check for a impulse wave coming down. Also, the 40 in RSI should be broken.
• Perhaps a bullish attempt that fails to break above the central part of this current congestion pattern can be further confirmation.
• Another scenario is that the market continues to rally to test 1.30. That would offer clues on bullish attempts. A failed attempt again suggests this is an area for topping.
• However a break above, using 100% projection of the EUR/USD rally in the European session, targets 1.3050 area.

Fan Yang
Currency Analyst
Commodity Trading Advisor

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