Forex Technical Update July 5, 2010 EUR/USD: Stalking Wedge Pattern; Bias is Further Rally
- 1H: The EUR/USD pair started this week consolidating last week's gains. Price action has developed into a wedge. The bearish divergence suggested a bearish attempt, and we are seeing one, albeit very weak.
- There may not be a lot of trading in the US session today, the day after US's Independence Day celebration, although banks are open.
- From the wedge, we can first see a bearish scenario. After the strong rally on Friday, it won't be surprising to see a correction. For the bullish outlook in the short-term to be valid, this correction should not go below 1.2350.
- Let's take a look at the daily, to see the projection of the current short-term bullish attempt.
- Daily: The Daily chart is showing a new established low at 1.2150. This is above the 1.1880 low in early June, violating the latest downswing from April.
- The strength of the EUR/USD rally last week suggests some feedback mechanism to follow through and push the market higher. The 1.26 level is acting as resistance at the moment. But if it fails, the market should see resistance near 1.2750. This would satisfy equality of the previous corrective wave. This may complete a AB=CD retracement pattern.
- I will continue to stalk this pair with anticipation of some further short-term bullish attempt this week. If the market tops off at 1.2750, I will be ready for a bearish outlook towards first 1.2350, then possibly back to 1.1880.
Fan Yang Currency Analyst Commodity Trading Advisor
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