Forex Technical Update August 4, 2010
EUR/USD Hits 1.3250 with More Bullish Signals
- 1H: The EUR/USD has been very strong, and in the last update, I noted the 1.3250 area as a significant resistance. If the market breaks above, it invalidates the still-bearish bias I have on the pair. This is the farthest it should stretch if the market is still bearish in the intermediate term. The short-term is dominated by bullish momentum.
- In the 1H RSI, the readings have been mostly above 40, a strong confirmation of bullish momentum. The market also attacks the 1.3250 with the RSI breaking above 75. That in it of itself, is also a bullish signal. It may not be as strong now, because we know this could also be an exhaustion move at the end of a rally.
- The main thing is that the RSI is declining now, below the low from last US session. This creates a positive reversal signal if the price does not decline lower then the previous low at 1.3150.
- Also, if the RSI stays above 40, that is suggestive of a continuing strong rally.
- A break above the wedge pattern is a signal of continuation.
- Day: The daily chart shows the RSI breaking above 70, a bullish signal if it can go even higher. Breaking the previous high in July is a confirmation of bullish strength.
- Basically what we have is a pair that is only showing strength in the short to intermediate term. However, it is challenged at the 1.3250. A break above it means the strength has spilled over to the intermediate term. Then, after a throwback confirmation, a short-term target could be 1.3500 area.
- That can still hold and keep the pair in ranging mode.
Commodity Trading Advisor
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