Forex Technical Update
The EUR/USD has been sliding sharply since the forming a double top below 1.3380 and falling below the support at 1.3250. There has not been any significant pullback, and one expression to warn against buyers during such a slide is don't try to catch a falling knife. However trading strategy to fade on a pullback would also have stayed sidelined. As the market digs lower, and the conditions become more oversold (as the RSI in the 4H chart dips below 30), we can look for major support levels to give this market a short-term bounce.
The first support pivot is at 1.3023. This provided support for a rally of about 250 pips in early February.
Then the 1.30 psychological support, did provide actual support in mid-March for a rally of about 380 pips.
The last of the support pivot goes down to 1.2968, which provided a rally to 1.3485, 517 pips.
Even though we have seen some strong moves from these support levels, we should stay conservative because EUR/USD does have a bearish bias in the daily chart. The daily RSI has mostly stayed under 60 after dipping below 30 (to the left of the chart). A break below 40 in the RSI suggests reflects momentum returning to that bearish mode. Price is trading under the 200 day simple moving average. With that considered, any bullish outlook from the support pivots should be limited to a 38.2% - 50% retracement of this week's bear run.
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.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.