EUR/USD Challenges 1.34 to Start Week

\ 9:57 PM EDT \ January 13th, 2013

Forex Technical Update

EUR/USD 1H chart 1/13/2013 9:53AM EST

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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.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.

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