Forex Technical Update
The conventional wisdom for the NFP was that terrible data could be good data as it heightens expectations of Quantitative Easing by the Fed. FXTimes noted that we probably need data to be below 50K to bring up QE prospect. 80K is bad but not terrible enough to force the hands of Bernanke, who is reluctant to QE.
EUR/USD 1H Chart 7/5/2012 9:55AM EDT
The 1H chart shows a break below the 7/6 Asian-European session range between 1.24 and 1.2360. The break to the downside pushes the market closer to the June low near 1.2285. This threatens to continue the bear trend that started in May 2011.
In the very short-term, if there is a pullback that treats 1.2360 as resistance, we should strengthen the case for a test of the 1.2285 pivot. However, a break above 1.24 would be a reflection of risk-on trading and the EUR/USD is likely to continue a medium term consolidation so far between 1.2285 and 1.2745.
If will be interesting to see if the market can break below 1.2285. That exposes the 1.20 psychological support and the 1.19 2010 low, as shown in the weekly chart below.
If we get a pullback after falling below 1.2285, 1.24 can be expected to provide resistance in the bearish continuation scenario. A break above would open up the scenario for another period of consolidation.
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.
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.