EUR/USD 1H chart 1/28/2013 8:50AM EST
Flag consolidation: The EUR/USD is developing somewhat of a flag pattern as it consolidates just under the 2012-high of 1.3485. This “flag” is a little premature as it lacks establishment of support, but the resistance has been established in a very short-term trendline. Looking at the 1H chart, the grey box represents last couple of week’s range, which EUR/USD broke above to end last week (1/25). Note the RSI holding above 40 and tagging 70, signs of bullish momentum development. It has held above 40 again and is about to break above 60, which would be a continuing sign of bullish momentum. Price is also attacking the resistance of this premature flag pattern.
A break, which is occurring as I wrap up this post, focuses on the 1.3480-85 area, as well as the 1.35 psychological handle, continuing a bullish trend that has started in July 2012. Failure to clear the flag pattern, or strong rejection at the 1.3480-85 area can continue the short-term correction stage, which has the 1.34 handle to test as possible resistance turned support.
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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