Forex Technical Update
EUR/USD Chart 1H 5/23/2012 8:02AM EDT
The EUR/USD fell from slightly above 1.28 starting in the 5/22 Asian session after it developed a bearish divergence with the RSI in the 1H chart. It has since fell sharply but is now testing (and cracking) the 1.2625 support pivot see in the daily chart below. In doing so, it has developed a bullish divergence with the RSI in the 1H chart.
Looking at the 1H chart, we see near-term resistance at 1.2688. Above that I think the market can look for 1.27, 1.2740. If the 1H RSI stays below 60 after a pullback, the consolidation is minor and within the intra-session time-frame, and bearish momentum remains for another test of our support and possibly the 1.26 handle.
If the RSI reading pushes above 60 and tags 70, then we would be in a more significant correction that had begun at the end of last week. In this scenario, the pullback is likely to retest the 1.28 area.
EUR/USD Chart Daily 5/23/2012 8:08AM EDT
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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