Forex Technical Update

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EUR/USD 4H Chart 8/20/2012 7:10AM EDT

"EUR/USD

There is not much new development for the EUR/USD since last week. It continues to coil in a sideways manner getting to the convergence point between declining and rising trendlines. The 4H RSI is stuck between 40 and 60 while the moving averages whip each other and price back and forth. These are all signs of a directionless market, but even if these converging trendlines are broken, we need to look for more clues before thinking direction.

The support pivot to break for bearish outlook is the 1.2240 low of last week. This opens up the 1.2042 2012-low as well as possible bearish continuation into 1.20, 1.19.

A bullish break above 1.2385, which was last week's high, opens up the August high near 1.2440. Only above this 1.2440 pivot is the market finding direction, exposing the June highs near 1.2685 and 1.2750.

The break of the trendlines don't really mean anything at this point as they area about to converge. It would only mean an increase in volatility. Only if this increase in volatility breaks out of the August range so far, does it mean that the market is finding a direction.

EUR/USD Day Chart 8/20/2012 7:22AM EDT

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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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