Forex Technical Update

Previous: EUR/USD Falling to Support Cluster After US Manufacturing Data (5/1)

 

EUR/USD 4H Chart 5/2/2012, 7:25AM EDT

EUR/USD

The EUR/USD indeed fell from a declining trendline (which was in the 1.3280-1.33 area) and in the 5/2 European session, extended that decline through a rising channel support. The 4H chart shows a heavy push through 1.32, and the pivot near 1.3170. The move also pushed price below the moving averages of periods from 200 down to 8 in the 4H time-frame. Entering the 5/2 US session, this breakout opens up the 1.2970-1.30 support zone.

EUR/USD 1H chart 5/2/2012 7:30AM EDT

EUR/USD

Looking at the 1H chart, we see that the breakout established short-term bearish momentum with the RSI reading dipping below 30. This in the near-term might be a sign of oversold condition starting the 5/2 US session. If there is a pullback, a market should find resistance near the broken 1.3170 pivot level, while the RSI should be held below 50. Given some elbow space the bearish breakout can still confirm if the pullback does NOT push back above 1.32, and the RSI reading stays below 60.

Join the Market Intelligence Briefings to get fundamental analysis, technical setups, trade plan assessments for EUR/USD, and other currency pairs.

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.