The 1H chart shows that last week, the market found support at 1.3512. This week, the market held above this low, and have been putting in higher highs and higher lows. Traders faded USD after the FOMC event risk and EUR/USD pushed to 1.36, before stalling. Price action has cleared above the moving averages, signaling a bullish reversal. The 1H RSI has been holding above 40, but the inability to push above 70 shows that the new bullish momentum is still weak.
Rising wedge scenario: If price fails to push above 1.36 and falls below 1.3560, and below the rising trendline seen in the 1H chart, there would be a break down of a rising wedge. This would signal a bearish continuation towards at least the 1.35 handle and 1.3476 low on the year.
Note that a bullish divergence with the RSI has formed in the daily chart. With momentum building in the 1H chart, we can anticipate a bullish correction towards at least the 1.3676 pivot. A break above 1.37 at this point could revive the bullish outlook and open up the 2014 highs at 1.3966 and 1.3993.(EUR/USD daily chart, 6/18)
However, if the rising wedge pattern scenario develops in the 1H chart, then we should look for 1.3476. Below 1.3476, look for Nov. 2013’s low at 1.3295-1.33 as the next key support.
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