EUR/USD 4H Chart 8/6/2012 7:20AM EDT
The EUR/USD rallied sharply after the better-than-expected US Non-Farm Payroll data released on Friday (8/3). The rally seen in the 4H chart pushed through the 1.2330 resistance pivot and cracked the 1.2406 high of the week. This was also a previous support pivot seen in the daily chart. Even though the EUR/USD reached all the way to 1.2450, it was quickly rejected. It barely closed above 1.2406 in the 4H chart, and never closed above 1.24 in the daily chart.
Before that, we should consider a previous resistance area in 1.23-1.2330 as an area of possible support. As the EUR/USD fade back closer to this area in the US session, the question is whether Friday’s price action has convinced EUR/USD bulls to continue the push.
If the market pushes below 1.23, the next key support is the rising support, which could be met around 1.22. A break below the 1.22 handle, is a break below a consolidation pattern. Being able to then push below the 1.2135 support pivot would suggest a bearish continuation scenario, exposing the 1.20 handle, as well as the 2010-low at 1.19.
The bullish scenario:
To the upside, if the market continues to push through 1.25, and therefore break the declining trendline from June, it opens the EUR/USD to the next resistance pivots at about 1.2690 and then 1.2750 (highs in June and July).
EUR/USD Daily Chart 8/6/2012 7:25AM EDT
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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