Forex Technical Update
There were mixed reactions in USD-crosses after the better than expected Non-Farm Payroll release last Friday. For the EUR/USD, there was USD-strength, then a pullback to the price levels right before the release. This week, we have some follow through to the downside, but as we gear up for the US session, the market has found support at 1.3030, just above the low from its recent consolidation.
The one hour chart shows a reversal-type candle stick combination and also a failure of the RSI to break below 30. These are signs of a weak bearish attempt that needs more momentum. Below the 1.30 psychological support as well as 38.2% retracement, the market opens up 1.2850, near 61.8% retracement and a pivot.
Otherwise, we are just completing a double 3 correction which has been pretty flat. The 4H Chart shows a motive wave up with an extended 5th followed by this double 3 correction - which is 2 abc corrective waves connected by wave x. Also note that the RSI reading in the 4H chart is back to 40, where there should be support if the momentum is to continue to be bullish in the medium term. A retest of the 1.32-1.3230 resistance zone will be key because a break above opens up 1.36, and a declining trendline seen in daily charts.
Fan Yang CMT is a forex trader, analyst, educator for IBTrade; and main contributor for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.