Previous: EUR/USD Testing Key Trendline Support (10/26)

EUR/USD 4H Chart 10/29/2012 7:25AM EDT

EUR/USD 10/29/2012 4H chart

Support cracking: The EUR/USD has already cracked the 1.29 handle on Friday (10/26), but it failed to clear a rising trendline support. There was a brief bounce toward 1.2960, but the bearish trend since the 1.3138 high remained. As we gear up for the 10/29 US session, EUR/USD is at it again, cracking 1.29 handle and showing ability to break below the rising trendline.

Next support: If the market breaks below 1.29 and upon a pullback can stay under 1.29 or 1.2920, the bearish outlook remains. The short-term targets and support factors are at the 1.28 handle, a psychological and actual support pivot. Below that the 1.2740-1.2750 area include the 38.2% retracement and a previous resistance/support pivot.

Within consolidation: Consider this. Even though the market broke the rising trendline, the fact that is was already trading sideways since the  market hit 1.3170 suggests the bearish break is not significant until the break below the 1.28 area, in which case we would have formed a top. Then at 1.2740-50, we complete and ABC correction, and as long as the daily RSI is above 60, there is still a chance fot the bullish momentum to come back and refocus on the declining trendline (from 2011) that has held so far.

EUR/USD Daily Chart 10/26/2012 7:42AM EDT

EUR/USD 10/29/2012 daily chart

 

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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