Forex Technical Update

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EUR/USD 1H Chart 1:36PM EDT 6/26/2012

EUR/USD

The EUR/USD has been bearish since topping last week at 1.2745. The 6/26 US session traded the EUR/USD down to about 1.2440. The 1H chart shows a rejection from the downside and a bullish candle suggesting consolidation. The 1H RSI reading is showing an extended bullish divergence. This simply reflects the current loss of momentum. Sometimes it can be a sign before a reversal.

If there is a reversal, the market needs to break above 1.25 and the declining trendline seen in the 1H chart. Ability to hold above 1.25 opens up 1.26 area where the 200-hour SMA resides as well. This is between the 50% retracement (1.2590), and 61.8% retracement (1.2625). We can expect some bullish upside risk to this area within the bearish outlook. he 1.2540-1.2550 area was also a pivot seen in the 4H chart.

Above 1.2625 however, the picture does not looking bearish.

Also if the RSI does not break above 60, there is still general bearish momentum. A break above 60 however is a sign that the bearish outlook is weakening, and the market may be switching to optimism ahead of the EU summit this Thursday-Friay 6/28,-6/29.

EUR/USD 4H Chart 1:45PM EDT 6/26/2012

EUR/USD

Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist of FXTimes - provider of x 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.