The EUR/USD slipped below 1.35 over the 11/15 Asian session. The 1H chart shows a market in a persistent decline until the European session where the market found support at 1.3430. The RSI reading was held close to 30, and finally bounced back up to 50, an initial sign of flattening. The 1H bullish candle off of the 1.3430 low was stronger than any of the bullish or bearish candles in the decline from 1.3795, but is rivaled only by the bullish candles seen in the corrective rally from Nov 10-11.
The first resistance for this corrective rally is the 1.3568, 37.2% retracement level, which is reinforced by a pivot zone seen going back to 11/10. Typically if the market is to be contained below 38.2% retracement, a flat correction can be anticipated. However a break above the 1.3570 area opens up a deeper correction, possible to the 1.3650 level, which is also reinforced by a pivot zone. The 200 period simple moving average will also be coincident by that time. This represents a key resistance cluster above which, the bearish scenario will have to be re-evaluated.
The 4H chart shows a market with bearish momentum as the RSI remains below 60, and just tagged 30 again. While this confirms ongoing bearish scenario, a correction has occurred the previous 2 times the RSI kissed 30. Note market action also respecting a wedge support after a swing projection. There is a chance the market can dig lower to the 1.3380 pivot before a correction, but one is imminent.
Fan Yang CMT is the Chief Technical Strategist FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources