Previous: EUR/USD Consolidating Under 1.30 (11/26)
EUR/USD 1H Chart 11/27/2012 7:56AM EST
Congestion-expansion: The EUR/USD was held under 1.30 last Friday(11/23) and consolidated during Monday (11/26). Price action go into a very narrow range, and was coiling during the 7/26 US session. We can say there was some congestion, after which there was a pop to the 1.30 handle, cracking it. However, there was no more steam during the 11/27 Asian session, and after getting into the European session, the EUR/USD fell back from 1.30 to 1.2935. Support is found and price action remains in this sideways expanded consolidation.
Momentum: In the 1H chart the bullish momentum from last week is actually still maintained as the 1H RSI reading held above 40 (after going above 70 last Friday). But, falling below 40 especially if the reading can tag 30 would reflect loss of bullish momentum from last week.
Central pivot: When the market develops this type of sideways action, how price reacts around the central pivot could often give us clues on directional bias. We have seen some pivot action around the 1.2970 area. A break back above 1.2975 takes away the bearish bias established during the 11/27 European session. Holding below 1.2970 during the US session could be a clue that bearish bias is taking over, and that the sideways consolidation could turn downside in the short-term.
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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