EUR/USD Daily Chart 10/17/2012 10:10AM EDT
Rally vs. Trendline: The EUR/USD has been bullish since the July low at 1.2042, as seen in the daily chart. September-October consolidation showed respect for the 200-day SMA, which is flattening from a declining slope. The RSI has also tagged 70 and held above 50, with another attempt this week to push at 70. These are some bullish continuation signs. However the rally is about to test a key falling trendline in the 1.3150-1.3170 area, which includes the previous resistance pivot.
Trendline holds: If the market can’t break this trendline, and eventually falls below the rising trendline, a short and medium term bearish, the market could be turning to a bearish outlook in the short and medium term. This opens up the 1.28 and 1.2750 pivots in the short-term. The medium term bearish outlook opens up below these support factors, and the bearish mode seen in the weekly chart remains.
Breakout targets: A break above 1.3170, and the 1.32 psychological handle should open up the 1.3480-1.35 area. This is the 2012 high and resistance pivot. Also, if the RSI in the weekly chart can push above 60, it is a major game changer in momentum. There are still going to be bearish markets in the short-term, but the long-term outlook may be shifting.
EUR/USD Weekly Chart 10/17/2012
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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