Forex Technical Update

Previous: EUR/USD - A Trade Plan to Buy at 1.3165 Support Cluster (3/02)




The EUR/USD followed through a double top with a slide below 1.33, and below 1.32. In the previous update, we looked at a support cluster near 1.3165 as well as a trade plan to buy from here. The risk was a bearish continuation, and a stop was anticipated at 1.3130 and the reward potential was 1.33. Although the market is making higher lows and highs, the 4H RSI shows flattening of momentum and therefore the bullish outlook was not aggressive. This trade plan has a 145:45 or 2.77:1 reward to risk.

As the market tested the support cluster heading into the 3/5 US trading session, we are seeing a bounce. In the 4H chart, this bounce is developing an engulfing pattern, pushing above 1.32. The previous 4H candles were doji types, with no body, which reflected indecision.

Now, the current rally is only a first signal for the rebound back into the bullish mode. In the 1H chart, we see that the RSI is rising back toward 60 after tagging 30. Inability to break 60 reflects maintenance of bearish momentum. The bullish outlook does not look good if the market crashes back below 1.32 with the RSI back below 40. On the other hand, if the RSI pushes above 60, we have a good sign that bearish momentum is killed, and the bull swing toward 1.33 improves in probability.


Join us in the 3.6.2012 Market Intelligence Briefing, as we follow up with this and other trade plans.

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.