Forex Technical Update

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EUR/USD 1H Chart 8/7/2012 6:45AM EDT

EUR/USD 8/7/2012 1H chart

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.

So far in the 1H chart, the market appears to maintain bullish bias as far as the RSI reading (momentum), moving average alignment (trend strength), and candlestick size (price action).

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

EUR/USD 8/7/2012 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.