Forex Technical Update
EUR/USD price action has been very bearish, and did break below 1.30, but stayed above the 1.2970 support pivot. However, it immediately pulled back. In the 1H chart, we see that momentum is not bearish but at least sideways if not bullish. Price action pushed back above the 200 hour simple moving average and after testing the 200H SMA, the EUR/USD is in a sling shot to the upside. This is a strong bullish price action signal along with the fact that it has pushed above 61.8% retracement of the 1.3210-1.2991 swing.
There is a bearish divergence with the RSI. If a decline does follow through in the 4/17 US session, we can say that the EUR/USD is flat with a bearish bias in the short-term. However, if the market stays above 1.31, and pushes above 1.3210, we are building strength from a false breakout (below 1.30), and have upside risk toward at least 1.33 (near triangle resistance). Above that we open up 1.3380 and 1.3480 resistance pivots.
The bearish scenario is challenged from the perspective of price action as well as short-term momentum. However, if the market can stay below 1.32, the bearish scenario still has a good chance. The 4H chart shows some possible clues that can swing things to the downside. Respect of the 200 4H SMA, and failure of RSI reading to go above 60 will be signs of a weak bullish attempt. The breakout from 4/16 is false, but if the market can't build strength from it, another attempt might be valid.
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.
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