Today is Memorial day in the US, which is a bank holiday. Trading is likely to be thin, but it can be volatile as well.
So far we saw some action in the 5/26 European session. There was a bullish push from last week’s low around 1.3615. This rally completed a double bottom seen in the 1H chart above.
This “bottom” is setting up a bullish correction against a prevailing bearish trend in the 1H chart. For now, if we respect the short-term bearish trend, we should limit the near-term bullish outlook to 1.3678-1.3686 area, which:
1) 200-hour simple moving average
2) a previous support/resistance pivot area.
It appears that the 1.3650 level is providing some resistance as we get into the US session. That is the level to break above if the market is to extend the bullish bias towards the 1.3678-1.3686 support/resistance area.
While a small double bottom is complete in the 1H chart, a large double top is complete in the daily chart.
However, there are a few of technical factors traders might be looking at to support, buy up EUR/USD at least in the very short-term:
1) 200-day SMA
2) A previous support pivot at 1.3638.
3) The RSI is turning up from 30, an oversold level.
Short-term Bullish, but within Neutral-Bearish Outlook:
Looking at the 1H and Daily chart we can expect some very short-term bullish attempt. However because of the topping action in the daily chart, we should limit the bullish outlook for now, since the EUR/USD has turned from bullish to sideways to possibly bearish, IF the market respects the double top in the daily chart.
I noted the 1.3678-1.3686 area in the near-term. But above that, we should also monitor the 1.3730-1.3735 area for resistance. If the market is indeed turning bearish, traders should look to sell on these rallies.
Then, a break below 1.3615 would open up the 1.3475, 2014-low, to the 1.35 handle.
A push above 1.38 might be needed to take away the bearish outlook and return the eur-usd to a neutral-bullish mode.
Previously: EUR/USD – Look for a Pullback for Better Entry
To contact the reporter of this story, email Fan Yang at email@example.com