Forex Technical Update

Previous: EUR/USD Trading with Low Volatility Between Converging Trendlines (9/27)

EUR/USD 1H Chart 9/28/2012 9:24AM EDT

EUR/USD 9/28/2012 1H chart

Double bottom and trendline breakout: The EUR/USD bounced off an old resistance trendline, using it as support form a double bottom seen in the 1H chart (in the grey). The rally during the 9/27 session extended into the 9/28 Asian and European sessions pushing above 1.29, and coincidentally breaking above the declining trendline going back to the September high of 1.3170 (where the market had a double top in the 1H chart the same “size” as the current double bottom).

Throwback: If a throwback develops, holding above 1.29 or even 1.2880 should keep the bullish outlook in the short-term. However, if price falls below a projected channel support (parallel to the rising resistance trendline that already exists in the near-term, AND the RSI falls below 40, then we probably need to scrap the bullish idea, in which case the focus remains on breaking below 1.2850 again.

Bullish scenario: To the upside, the rally first meets this week’s resistance pivot at the 1.2970-1.2975 area. Bullish continuation is then challenged by the 1.30 psychological handle. Very likely there will be some choppiness around 1.30. If the market can push through, it opens up the September high of 1.3170, in a bullish to sideways type of market.

EUR/USD 4H Chart 9/28/2012 9:28AM EDT

EUR/USD 9/28/2012 4H chart

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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