EUR/USD Trading At Short-term Trendline
The EUR/USD has been rallying in the past 2 weeks after it barely cracked the 1.30 handle on 4/13/2012. It has since been treading with a relatively well-behaving trendline. The 4H chart shows a market in a rising channel or wedge pattern. The moving averages, and price action relative to the moving averages reflect a directionless market in the 4H time-frame. The RSI shows a bearish divergence and combined with a strong bearish 4H candle to end the 4/26 trading session, there some sign of exhaustion after a laborious 2-week rally.
In the 4H chart, we can see that a slide below 1.3140 will be a clear sign of breakout below the rising pattern. In this scenario, we would open up the 1.2970-1.30 support zone. If the 4/27 European session instead respect the risingtrendline, as well as other support factors near 1.3170, there is still upside toward the 1.33 handle (near a decliningtrendline as well) if the market can once again push above 1.3250. A persistent bullish market going above 1.33 and the declining trendline opens up the 1.3380, and 1.3480 resistance areas.
Near 1.33, we might have a counter-trend bearish scenario where we might have a bearish correction even if the market is turning bullish. The 1.32 handle will be of interest for a rejection from 1.33.
Below 1.3140, we might have a breakout scenario, with short-term outlook limited to 1.30, with some more common lows in the short-term near 1.3050.
Let’s see how the market sets the tone after a 2-week rally that has been weak and choppy as it turns the corner of the 2nd week into a week where the NFP will likely dominate market participants’ attention.
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Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist of FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.