Forex Technical Update
EUR/USD 1H Chart 8/7/2012 6:45AM EDT
The EUR/USD is in consolidation so far this week after reaching a high of 1.2440 last Friday (8/3). During the 8/6 session, the fell to 1.2340, just above the 1.23-1.2330 pivot zone. So far price action has been consolidating between this 100-pip range, in fact making high lows and lower highs, forming a triangle. A breakout from the triangle suggests test of the consolidation boundaries.
The thing is, outside of this triangle there are resistance factors just above, and support factors just below. The next resistance factor above the triangle resistance and the 1.2440 high would be in the 1.2470-1.2480 area, where there is a declining trendline going back to the June 20 high near 1.2740. It should also be noted that the 1.2475 level is the 61.8% retracement level, and the swing projection seen the 4H chart targets 1.2480.
A clear break above 1.25 then reflects a market in bullish trend. Otherwise, it will become more clear that the EUR/USD is simply forming a small abc corrective rally against the bearish trend we had so far since the 2011 high of 1.4930, set on May 5, 2011, or more likely just an ABC correction against the decline since the 2012 high of 1.3485 set in February 2012.
EUR/USD 4HChart 8/7/2012 6:55AM EDT
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.
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