Forex Technical Update

Previous: EUR/USD Sets Up a Consolidation Pattern Under 1.2440 Pivot (8/7)

EUR/USD 1H Chart 8/8/2012 6:35AM EDT

EUR/USD 8/8/2012 1H chart

The EUR/USD continues to trade in a range between the Friday's (8/3) high at 1.2442 and then Monday's (8/6) low at 1.2340. So far we have 2 tests of the 1.2442 level and about to be a second test of the 1.2340 support. The RSI reading in the 1H chart is stepping on 40, a break below which reflects loss of the bullish momentum established by the recent bull swing from last week.

If the market breaks 1.2340, we do have the 1.23-1.2330 area as a challenge. This was the resistance area for price action since July 9. A break below 1.23 exposes the rising trendline connecting the July low with the August low, seen in the 4H chart. Declining price would probably meet this trendline around 1.22. A range breakout projection, using the width of the range targets 1.2240.

Going back to the 1H chart, if the market pushes back above 1.2375, the market is likely intending to test the 1.2440 range resistance again. In this scenario, we are likely going to also test a declining trendline (from June 20 high of 1.2740) in the 1.2440-1.2450 area.

In the near-term a break above 1.2440/50 likely opens up the 1.25 handle, with a break above that exposing first the breakout target of 1.2540, then the resistance pivots at 1.2692 and 1.2750.

EUR/USD 4H Chart 8/8/2012 6:40AM EDT

EUR/USD 8/8/2012 4H chart

Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.