Forex Technical Update

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EUR/USD 1H Chart 9/18/2012 6:50AM EDT

"EUR/USD

The EUR/USD failed to sustain a new high in yesterday's (9/17) US trading session, when the market tested Friday's 1.3169 high. There was a quick rejection there and the market fell under the 1.3120 intra-session pivot. In the previous update, I noted that a break below this pivot suggests further consolidation, and possible double top formation. The 1-hour chart shows that this pivot became resistance before the market completed the double top during 9/18 European trading.

The 1H RSI reading is falling below 40, a sign that the bullish momentum in the short-term is lost. The 1H chart shows a double top breakout projection, which targets the 1.30 handle. This scenario is the one the 9/18 US session will be faced with. However if there is a pullback, back above 1.3120, this bearish outlook would not look good. A hold below 1.31 would be a good sign that the market is focused on further bearish correction.

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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