Forex Technical Update

Previous: EUR/USD Signals Bearish Continuation After Failure to Break Resistance Cluster (11/9)



After the largest 1 session drop since August 2010, the EUR/USD found support at 1.3483 and is in a pullback above the 1.36 handle heading into the 11/10 US trading session. Now we are in corrective mode, and has so far retraced 38.2% of the decline from 1.3858 to 1.3483. The 1H RSI resolved a bullish divergence and is now in the neutral zone. Ability to hold below 60 in the US session will be indicative of strong bearish momentum being maintained.

Price action was strong as the 1H candle at the beginning of the European session (about 75pips compared to the strongest bearish 1H candle in the 11/9 European session which was about 100 pips).

In the pullback process, we observe the respect of a pivot around 1.3554 level, which flipped form support to resistance and back to support. If the market is held below 1.3627 (38.2% retracement), and falls below 1.3550, we are either in a bearish continuation or a flat correction, where 1.3627 is the flat range resistance. However, if the market holds above 1.3550 and pushes above 1.3627, we are likely in a deeper, zig zag type of correction. This type of correction typically rallies back toward 50%-61.8% retracement or 1.3671-1.3715.

Note in the 4H chart that if the pullback gets to 1.3715, it is coincident with the 4H 200SMA. A break above this therefore puts a dent in the bearish continuation scenario, which as mentioned in the previous post, is to 1.3380 (pivot and 78.6% retracement of the rally from 1.3145 to 1.4243)


Fan Yang CMT is the Chief Technical Strategist FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources