Previous: EUR/USD Falling Back Under 1.25 – Double Top?
EUR/USD 1H Chart 9/5/2012 7:25AM EDT
Double Top: The EUR/USD completed a double top when if finally fell through the 1.2558 pivot as you can see in the 1H chart. There was a push below the topping pattern which found support just above 1.25. The euro then strengthened against the greenback, with EUR/USD pulling back to where the double top was completed, near 1.2558. As the market gears up for the 9/5 US session, it is basically testing the resolve of the bears with a foray back toward the top.
Monitoring Pullback: My assessment of when this pullback will show lack of bearish conviction is if price pulls above 1.2580, a support/resistance pivot as well as 61.8% retracement of the bear swing from 1.2627 to 1.2501. Also if the 1H RSI pushes back above 60, the EUR/USD has likely lost the bearish momentum.
Within Bullish Picture: The 4H chart shows that this bearish attempt is still within the scope of the bullish technical picture in this time-frame. Note that the RSI is still above 40, showing that bullish momentum has not been lost. Also price action continues to show higher lows when the market bounced off 1.25, and basically above a short-term trendline from 8/22.
A break above 1.2580 should have bullish continuation implication, putting the focus back on last week’s high of 1.2635. A break above that opens up 1.2685 and 1.2750.
Risk Events: The market is basically slowing down ahead the ECB interest rate policy meeting on Thursday and the US NFP (US jobs data) on Friday. If the market can push below 1.2440, clearing a medium term rising trendline going back to the end of July, then we have strong evidence of topping, and reversal into a longer term bearish mode (since topping at the May, 2012 high of 1.4933).
EUR/USD 4HChart 9/5/2012 7:30AM 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.