Forex Technical Update
EUR/USD 1H chart 1/13/2013 9:53AM EST
1.34: This week’s trading has only begun as the 1/14 Asian morning session starts it off with the euro strength we saw since last Thursday’s ECB interest rate policy meeting. We saw the EUR/USD break above recent highs of 1.33 on Friday (1/10), which continues a bullish outlook that has the 1.3485, 2012-high in sight. So far at the start of trading this week, EUR/USD is challenging the 1.34 handle. A break above this, and a subsequent hold above 1.3320 on a potential throwback should maintain this outlook.
Overbought: The bullish outlook remains, unless there is a failure to break above 1.34 OR there is a quick break, and in either case, a fall back below 1.3244 could be a sign of false breakout. It should be noted that the RSI in 1H and 4H charts are both 70+, signaling overbought conditions. The daily RSI is about to tag 70. So even within the context of a bullish market, don’t be surprised by some consolidation, or even some bearish correction. Again, a correction below 1.3244 should be considered a significant one that can lead to further consolidation/correction. Another sign of a relatively significant correction is if the 1H RSI falls below 40 and tags 30. Otherwise, above 40, the RSI reflects maintenance of bullish momentum.
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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