EUR/USD 1H Chart 10/8/2012 7:25AM EDT
Failed bullish development: The EUR/USD failed to extend the risk-on reaction following the NFP on Friday (10/5). Instead, it started this week falling back under 1.30 and has cracked the 1.2950 handle ahead of the 10/8 US session. The 4H chart shows the price action breaking below some support factors like a projected rising support, and the previous resistance area to be tested as support near in the 1.2960-1.2975 area.
Bearish outlook: The bullish scenario is now unclear and a short-term bearish scenario is at hand. If the market can hold under the 1.30 handle this time, the focus is on the 1.2880 support pivot and the the 1.28-1.2815 support area. If this bearish scenario does happen, EUR/USD will be facing a key rising trendline by the time it gets to 1.28-1.2815.
Momentum: Be careful because technical signs are unclear for the bearish outlook as well. The 4H RSI is still holding above 40, and shows maintained bullish momentum from this recent upswing in October. A return above 1.30 can refocus the market to the 1.3070 high from last week, and the 1.3170 September high.
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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