Forex Technical Update
- The EUR/USD has been consolidating to start the week. After a low of 1.3498, the market rallied to find resistance at 1.3695. (Roughly a bounce from 1.35 to 1.37.
- Then it found support twice at 1.3556 and established a range between 1.3556 and 1.37.
- The 1H Chart above shows that 1.37 is near the 23.6% retracement level of the swing from last week's high to this week's low so far.
- If the market pushes above 1.37, the next minor consolidation level (seen Sept. 9), is also at the 38.2% retracement level at 1.3797 (1.38).
- A more aggressive correction can see the 50% retracement level at 1.3889 (1.3890), which is also at a minor consolidation level seen on Sept. 8.
- Despite such a rally, the market would still be bearish in the medium term, unless there is a break above the 1.3980-1.40 zone. Otherwise, the current rally should be categorized as a correction rally.
- Failure to break above 1.37, and a break below 1.3556 starts the bearish continuation scenario.
- Then in the short-term if the market closes below 1.35 with a strong candle, we have near-term support immediately below at 1.3460. Then if the market pushes below 1.34, it opens up the 1.29-1.30 (2011 - 2010 low) support range as target.
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Fan Yang CMT
Chief Technical Strategist