Previous: EUR/USD Trapped in Holiday Consolidation (12/28)
EUR/USD 4H Chart 12/31/2012 7:30AM EST
Consolidation: EUR/USD continues to trade within the consolidation pattern seen in the 4H chart, which has reflected an indecisive market during the holiday season. As we gear up for the final US session of 2012, the EUR/USD trades under 1.32, near the consolidation support area. If the market is like it has been during the holiday season, it should have a tendency to get back to the middle of the consolidation range, around 1.3230.
Scenarios: Technically the EUR/USD has not topped, and the RSI shows maintenance of bullish momentum bias, while the reading remains above 40 after going above 70. Only a break below 1.3140, with the 4H RSI dipping below 40 should be a sign of topping/correction. This correction scenario opens up 1.31, and more aggressively 1.30. Otherwise, if the EUR/USD can push above 1.3310 with the RSI returning back above 60, and eventually 70, we have a bullish continuation, which keeps the outlook toward 1.3485, the 2012-high.
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.