Forex Technical Update

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EUR/USD

EUR/USD

The 1H EUR/USD Chart shows a gap to the downside to start the week. This bearish action is important as it break below the 1.3770 pivot as well as a rising channel support. It has pushed below 1.37 psych support in the European session as well. This is known as a counter-trend breakout, because last week's rally was counter to the bearish trend the EUR/USD has been in for the 2 weeks before that. Before the discussion of further bearish continuation, it should be noted that opening gaps tend to be closed, and it would be prudent to anticipate a similar action to the EUR/USD. A pullback towards 1.3770 can close the gap as well as confirm the bearish break if this rally attempt slows and tops off near 1.3770. Then a slide back below 1.37 confirms bearish domination.

The 4H EUR/USD chart shows a swing projection taking roughly the high 2 week's ago to the low a week ago, and swinging it from the high last week. This projection targets 1.3250, pending a break below the 1.3494 low. Note that 1.3250 is also near the 161.8% extended retracement of last week's correction rally. This scenario is also strengthened by a negative reversal signal in the 4H chart, where the RSI high is higher, but the corresponding price high is lower. During a downtrend, this suggests bearish continuation. As the Eurozone crisis drags on, the EUR continues to be pressured, and the safe haven currencies like the JPY and USD continue to strengthen.

EUR/USD

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Fan Yang CMT
Chief Technical Strategist
FXTimes