Forex Technical Update
The 1H EUR/USD chart shows a market that has been trading in an upwards consolidation channel. There was a throw-over during the 1/3 US trading session after, which a double top followed. The market then slid below 1.30 and is trading near the consolidation channel support. A breakout projection targets 1.2965, which is almost achieved as we gear up for the US session. Note the RSI falling below 40 in the 1H chart, which shows loss of bullish momentum. Breaking below 30 can confirm price action that breaks below the channel support.
If the market can stay below the 1.30 level, which is where the 200 H SMA also resides, we are looking at a possible bearish continuation. The downside target for this scenario should first be the lowest pivot of the consolidation zone at 1.2857. There is always a chance the market is not ready for bearish continuation, and instead follows with another corrective pattern like the channel in the 1H chart.
Failure to break below channel support and then ability to break above 1.30, and then the 1.3020 pivot opens up further corrective rally first to test the 1.3075 pivot above which, we are looking at 1.31, and then the 1.3190-1.32 resistance cluster(previous pivot, 23.6% retracement, 200 4H SMA - seen in the 4H chart).
Fan Yang CMT is the Chief Technical Strategist FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources