EUR/USD 4H Chart 11/20/2012 9:00AM EST
Correction, Gartley: EUR/USD continues to consolidate, but instead of a sideways manner between 1.28 and 1.2660, it seems like there is a bullish tilt and a correction. Since the 1.2660 low, you can see in the 4H chart 2 swings up. We are in the second swing now, and it is almost the same distance as the first swing. We can call this an almost completed ABC correction. Some might see it as a “abcd” harmonic retracement pattern as well – a Gartley.
This Gartley pattern would complete near a falling trendline resistance and 78.6% retracement. Not shown here, but 1.2840 is also 38.2% retracement of the entire downswing from 1.3138 (Oct. high) to 1.2660.
Momentum: The 4H RSI shows that the bearish momentum is about to be broke as the reading flirts with breaking above 60. It did crack it, but has since developed a bearish divergence with price, trying to hold under 60. If these bearish conditions remain, the focus will be on the current near-term rising trend support, probably near 1.2750. The 1.2660 low is also in sight, with a break that will expose the 1.26 handle.
If the RSI does push above 60, and price pushes above 1.2850, the market will be focused on the 1.2875-1.2880 pivot area, and also make the bearish outlook unclear. A break above 1.29 then opens up a bullish outlook.
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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