EUR/USD 1H chart 2/4/2013 7:55AM EST
Sell-off: The market is selling EUR/USD to start the week. From last Friday’s (2/1) high of 1.3710, EUR/USD has slid to almost 1.3550 by the beginning of the 2/4 US session. This took out Friday’s low and into a minor consolidation range we saw last week.
Momentum: The 1H RSI fell below 40, showing loss of bullish momentum in this time-frame. Last time this happened, we had almost 2 weeks of sideways action within about a 150-pip range. However, the 4H RSI is still above 40, so momentum in this time-frame remains bullish. Look to see what happens if the correction drags the 4h RSI down to 40. If the market remains bullish, there could be a bounce once the RSI has completed this “correction cycle”.
Trendlines: There is slight breakdown of a rising trendline that connects the 1/24 and 1/29 support pivots. But as the 4H chart shows, there is a another trendline under it holding price bullish in the larger degree.
Resistance, Support: Maybe we can expect this week to provide some consolidation. ECB interest rate meeting will be the key risk event. Maybe we need that before the market continues the trend, or signal a reversal. At the moment, failure to pull back above 1.3620 should be a sign of further weakness. There is support in the 1.3530/40 area. Below that the 1.3480 level is the resistance of a previous consolidation area to be tested as support, and might be reinforced by the rising trendline that goes back to the 1/10 support pivot.
EUR/USD 4H chart 2/4/2013 8:05AM EST
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.