EUR/USD rallied from 1.3513 to 1.3643 last week. Since then the pair consolidated, with a low at 1.3564. It was also trading between converging trendlines until the 6/24 European session, when price popped up from the 1.36 area.
There is some slight, nascent bullish momentum developing in the 1H chart. The moving averages are getting into bullish alignment and price is trading above them. The RSI however swung from above 70 to 30 and is now pushing back to 30. This does NOT reflect bullish momentum, but the breakout is still a breakout and provides a bullish breakout in the 1H chart.
(eurusd 1h chart, 6/24)
Note that around 1.3630, there is a falling trendline seen better in the 4H chart. We can anticipate some near-term pullback toward 1.36, especially if the 1H RSI gets above 70. If the pullback occurs but traders keep EUR/USD above 1.36 after the 6/24 US session, the bullish outlook is still in play. Also, if the RSI is pulled back down, but stays above 40, then bullish momentum is starting to pick up in the 1H chart.
Any bullish outlook coming out of the 1H chart will be going against a bearish market seen in the 4H chart. However, price action, moving averages, and the RSI in this chart reflects a market in consolidation. In this mode (consolidation after a bearish trend), the bullish outlook should be limited to the June high around 1.3675. Only a break above 1.3675 and perhaps 1.37 should introduce any bullish outlook outside of the short-term.
The bearish outlook would be revived with a break below the 1.36 handle, and/or a break below the rising trendline started from last week’s low of 1.3513. This bearish continuation scenario refocuses price action toward the 1.35 handle and 1.3476 low on the year.
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