EUR/USD 1H chart 7:10AM EST 1/15/2013
Triangle: The EUR/USD started the week challenging the 1.34 handle, but it held as resistance. So far, the 1H EUR/USD chart shows a market that is trading in a triangle. Well, as I report this condition, the triangle broke to the downside, and a support pivot from last Friday at 1.3320 is going to be challenged as support again.
Topping, retracement: While the break of the triangle implies increasing volatility, a break below 1.3320 is a sign of topping. Taking the width of the top, about 80 pips (1.34-1.3320), and we have a breakout projection at 1.3240 (1.3320-80 pips). We should also be aware of a support pivot at 1.3244. 1.3248 is also 38.2% retracement of the latest bull run since 1.2970 low of Jan. 4 to this week’s high of 1.34. A more aggressive retracement has the 50% at 1.32, and 61.8% at 1.3152, which is near the 200-hour SMA.
I feel that at this point of the EUR/USD’s topping attempt, a hold below 1.3350 on a potential pullback should be a good sign of the bearish bias holding.
Momentum: The 1H RSI is at 40. The bullish momentum can still be in play. But if the RSI reading falls below 40, especially if it tags 30, we can say EUR/USD lost bullish momentum in this time-frame, and is trying to establish bearish one. This should accompany the bearish retracement outlook in the short-term. A break below 1.3150 will be needed to usher in more consideration of bearish outlook.
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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