Forex Technical Update
The EUR/USD has fallen to the October low near 1.3145 as seen in the daily chart. The market remains bearish but a break below this support is needed to open up further bearish targets. The RSI had failed to break above 70, and is now returning below 40. A tag of 30 confirms bearish momentum, although in the very short-term may also indicate an oversold market.
The weekly chart shows the next support/target areas with a break below 1.3145. Note first that the momentum has been sideways as the RSI goes below 30, and than above 70, but is now in a bearish cycle as the RSI is declining and testing 40, a break below which reflects the bearish bias in the context of the consolidation that started May 2010.
Here are some support/target levels below 1.3145. First there is the 61.8% retracement at 1.0345. Below that we are opening up a swing projection toward 1.2850 area, but we might encounter support and 2011 low near 1.2860. For now, this 2011-low should probably be the maximum bearish outlook for a break below 1.3145. If the 1.3145-1.3150 area is to be established as resistance, the case for the bearish projections would be strengthened.
Fan Yang CMT is the Chief Technical Strategist FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources