Losing Bearish Bias and Momentum: This week EUR/USD has rallied from a fresh low on the year at 1.2247 up to 1.2447, near a resistance pivot from last week. The 1H chart shows the pair losing the bearish bias and momentum as price crosses over the 200-, 100-, and 50-hour SMAs, while the 1H RSI tagged 70, showing some bullish momentum in the very short-term.
Bearish Structure: Now, it should be noted that after this swing, the EUR/USD still has a lower high and a lower low so the structure still reflects the prevailing downtrend.
1.2340-1.23360: Now, to the downside, we can see an intrasession support pivot at 1.2360, shared earlier in the month. We can also see support/resistance and the 100-, and 50-hour SMAs around 1.2340. This 1.2340-1.2360 area is therefore a key barrier for the bearish continuation outlook. In other words, price will signal bearish continuation is if can break below 1.2340. But if this area provides support, EUR/USD is still in a bullish mode in the very short-term
On the 4H chart, we can see that EUR/USD is currently at a crossroad.
Falling Channel Resistance: This week’s rally pins the pair against a falling speedline from a November resistance pivot near 1.26. The 4H RSI is holding below 60 for the most part. So far, the bearish outlook revived a few weeks ago is still in play. So, we have a bullish attempt seen in the 1H chart, supported above 1.2360, against a bearish mode seen in the 4H chart providing a falling channel resistance around 1.2440.
The Bearish Scenario: A break below 1.2340 should revive the bearish trend and open up at least the 1.2280-1.23 area in the near-term, before the 1.2247 low on the year. Because the prevailing trend would be intact, there will be risk of the EUR/USD breaking below 1.2247 towards the 1.22 handle.
A break above 1.2450 would clearly break above the channel, and make a higher high of significance. This scenario would put EUR/USD into a consolidation mode, with upside risk back towards the 1.2575-1.26 area, and with downside risk now limited to 1.2275-1.23 area, and at least back to the 1.2250 low.
Previous Post by Author: Silver Breaks Above a Key Falling Trendline from July