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EUR/USD 4H Chart 9/27/2012 9:26AM EDT

Low volatility: In yesterday’s (9/26) EUR/USD update, we noted a rising trendline from July that use to be resistance and might be tested as support. So far the market has held above this line, as shown in the 4H chart, with dead volatility. The candles throughout the 9/27 session so far have been all insignificant.

Converging lines: As time progresses, price will be getting closer to the converging point of the declining trendline from 2 weeks ago, and the rising TL from mid-July. The low volatility also sets up like the calm before the storm.

Directionless momentum: When looking at the 1H chart, you can see that the RSI is now hanging tight between 40 and 60, a reflection of the momentum during consolidation, momentum of non-direction. Perhaps a break out of this 40-60 range by the 1H RSI reading will be a clue to which side the market is choosing after a this low volatility consolidation.

Immediate breakout targets: A break to the upside has 1.2973 as the first near-term resistance pivot to monitor. The 1.30 psychological handle is likely a commonly watched level as well. To the downside, there is a support pivot and 38.2% retracement in the 1.2740-1.2750 area. A rising support trendline from mid-July is the “last line of defense” before the bearish action turns from corrective to breakout-possibly trending mode. That would probably challenge bearish price action around the 1.27 handle.

EUR/USD 1H Chart 9/27/2012 9:35AM 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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