Previous: EUR/USD Forms a Double Top with a Break Below 1.2550 (6/21)
EUR/USD 1H Chart 9:37AM EDT 6/22/2012
The EUR/USD had a sharp sell-off during the 6/21 session, which broke below June’s rising trendline, as well as form a double top after breaking below 1.2550. It then consolidated through the 6/22 (Friday) Asian and part of European session. Entering the US session, we are seeing a pullback. The 1H chart shows a bullish divergence resolving withe price action pushing back above the overnight high at 1.2560.
Here are some things to monitor in this pullback. Note 38.2% retracement, 200-hour SMA at 1.26 psychological barrier. This is also likely where the market would test the broken trendline support as resistance.
Above that, observe a nascent declining trendline, previous support pivot and 50% retracement around 1.2630. If the market is to remain bearish heading into next week, or starting next week, we should see resistance in this 1.26-1.2630 area.
Also, the 1H RSI should be held below 60. If the market do not provide these clues and instead push above 1.2630, with RSI pushing above 60, and even tag 70, we should shelve the bearish outlook for now.
As I get ready to post the article, which is right after the US stock market opened at 9:30AM EDT, the EUR/USD being rejected. Falling back below 1.2540 in this near-term swing can suggest a failed pullback and suggest bearish continuation at least to 1.25 in today’s trading.
EUR/USD 5-min Chart 9:42AM EDT 6/22/2012
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist of FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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