- 4H and 1H: The EUR/USD never got hold of any bullish momentum after the initial jolt. The lack of confirmation of a break above 1.37 also hinted that the surge to start the week was not sustainable.
- The market is now filling the gap that started the week, showing bearish strength.
- Filling the gap is a bearish signal, but as we can see, the market is testing the 1.35 level, at 50% retracement just about to fill it.
- This coincides with the bottom of the gap. So at the moment, the bearish continuation signal is premature, but can be anticipated because of strong price action and the bearish momentum (RSI) seen in the 1H time-frame.
- However, you can see that the RSI in the 4H time-frame does NOT reflect a bearish case yet, as it is above 40, though soon to be tested.
- In the 1H time-frame we see declining momentum, so there is a bearish mode in the near term. The market broke below the near-term support, and is testing 1.35, struggling to break it. The SMA 200 is also being tested. Let’s take a look at the daily to see what the bearish scenario is.
- Daily: If the market breaks below 1.35, and for a better confirmation, below 1.3450, a decline may project to the 1.31/1.30 area.
- We essentially have a failed double bottom, after a failed rounded bottom.
- The proximity of the bottoms does suggest that although the market continues to be bearish, there is a big proponent that is looking for bottoming action. This dynamic makes for possible ranging mode in the intermediate term, with a slightly bearish bias.
Fan Yang
Currency Analyst
Commodity Trading Advisor
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