Daily Technical Update May 10, 2010 EUR/USD Retraces 61.8% of Slide; 1.31 Tested as Resistance.
- 4H and 1H: Following up after Friday's EUR/USD update, the pair has opened the week with a gap due to a $1 trillion stimulus approved in the EU. The rally continued after a failed attempt to fill the gap. In the 1H chart, we can see that the attempt touches the 1.31 area, coinciding with the SMA200. The 61.8% retracement level is basically holding.
- The RSI has turned bullish in the 1H, but is testing the 60 bullish range resistance in the 4H chart. You can also see the 1.31 resistance as a previous support area, so this is going to be an important level to monitor throughout the day for anyone anticipating a longer rally.
- 15-min: The 15-min also shows how Friday's high, became Monday's low. The RSI was bullish, and is now about to test 40, the bearish range support.
- The market is sliding ahead of the US session, and there seems to be a sentiment of fear to start. Who is actually confident enough to put on EUR/USD longs at this point? My guess is, many are waiting to short on a rally, and this may give them the opportunity.
- The bearish outlook would be in-line with the higher mode, which is also bearish.
- The gap behind this rally is of concern, and also suggests the volatility and event-risk exposure of this pair.
- As I am about to post, the EUR/USD is sliding to test the 61.8% retracement of today's range near 1.2915 (not shown on the chart). A break below this suggests the market will attempt again to refill the gap.
Fan Yang Currency Analyst Commodity Trading Advisor