Forex Technical Update

Previous: EUR/USD Holds Above 1.29 and Remains in Congestion Focused on 1.30 (10/15)

EUR/USD 4H Chart 10/16/2012 7:40AM EDT

EUR/USD 10/16/2012 4H chart

Congestion Breakout: The EUR/USD has been choppy and entered a bit of congestion in October as seen in the 4H chart. But as you can see, the EUR/USD rallied sharply above the projected declining trendline and is surging above 1.30, as the market gears up for 10/16 US trading. As it pushes above 1.3030, it is also breaking above another slower declining trendline that goes back to the September high at 1.3170. During this session, the next resistance pivot at 1.3070 is in focus. Above that, the 1.3150-1.3170 area is the previous high as well as a more significant declining trendline from May 2011.

The 1H chart shows the market pushing the RSI above 70, which is a sign of strength, although it is also a sign of overbought conditions in the near-term. This former consolidation area just under 1.30 should be treated as support for any subsequent throwback, as the market focuses on the 1.3070, and the resistance factors above that in the 1.3150-1.3170 area at the moment.

EUR/USD 1H Chart 10/16/2012 7:46AM EDT

eur/usd 10/16/2012

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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