The EUR/USD has been consolidating in November. After making a new low on the year near 1.2360, it rallied. Last week, it traded in a range roughly between 1.24 and 1.2505. At the end of the week, after a failed attempt to break below 1.24, EUR/USD sprung up and broke the range resistance.
The 1H chart shows the market pushing to 1.2577 before retreating. As we begin the 11/17 US session, price has pulled back to the 1.25 area, testing the broken range resistance area as support.
While we might still have some near-term downside risk, we should note that the area above 1.2460 can provide support if the EUR/USD is to maintain a bullish correction mode and confirm basing price action. Here we also have the cluster of 200-, 100-, and 50-hour simple moving averages (SMAs). A bounce off these SMAs would be a sling-shot bullish signal as well. Finally, the 1H RSI is approaching 40 after it tagged 70. If it holds above 40 it shows bullish momentum in this intra-session time-frame.
If the market does hold the bullish bias and momentum, there will be upside risk first toward the 1.2577 high, then the 1.26 handle.
The 4H chart shows that the current rally is going against a prevailing downtrend. It has broken above the 100-, and 50-period SMAs, and the 4H RSI has broken above 60. In other words, EUR/SUD lost its bearish bias and momentum in this time-frame.
However, 1.26 will likely be a critical resistance and we should expect sellers there. The 1.26-1.2635 area involves a support resistance pivot zone, the 200-period SMA, and a falling trendline coming down from mid-October’s high of 1.2887. Look for a bearish attempt to at least test the 1.25 area again, especially if both the 4H and 1H RSI’s are overbought (above 70), A break below 1.2450 (middle of last week’s broken range) then might revive the bearish outlook. for risk to 1.24, 1.2360, and possibly lower.
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