Forex Technical Update
EUR/USD 4H Chart 8/17/2012 6:55AM EDT
The EUR/USD has been range-bound all week, trading roughly between 1.2255 (the 1.2240 pivot was from last Friday, 8/10) and 1.2385 as seen in the 4H chart. Also note that the 4H RSI reading has been stuck between 40 and 60 this week, a reflection of the consolidation momentum. As we gear up for the 8/17 US session, the market sits just under this week's range high with the RSI at 60.
Looking at the daily chart, we see that the euro-us dollar is almost at the apex of converging trendlines.
This congestion price action sets up for some key fundamental trigger to push it out of the trendlines. A break out to the downside, followed by clearing the 1.2240 support pivot should open up the July low near 1.2040. An upside break and clearing of 1.2440/50 pivot exposes the correction to 1.2685 and 1.2750, though against the trend, we should probably monitor psychological handles at 1.25 and 1.26 as well.
The 1H chart shows a bearish divergence. The market has followed divergences with reversals all week. Will that be the case today?
EUR/USD Daily Chart 8/17/2012 7:00AM EDT
EUR/USD 1H Chart 8/17/2012 7:22AM EDT
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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