EUR/USD’s Bullish Pullback Rubbing Against Resistance

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EUR/USD's Bullish Pullback Rubbing Against Resistance

EUR/USD started the week pushing to a new low on the month and year, at 1.2663, before finding support in the 9/29 European session. As we get into the 9/29 US session, the pair is pushing above 1.27, showing a bullish pullback attempt. However, as it tests 1.2710, it is rubbing up against some key resistance factors for the near-term.

EUR/USD 1H Chart 9/29
eurusd 1h chart 9/29

(click to enlarge)

1) There is a falling trendline from last week’s high around 1.29.
2) The 50-hour simple moving average (SMA)
3) Also, the 1H RSI is at 60. If it turns back down from here, it would reflect maintenance of the prevailing bearish momentum.

It should be noted that this rally seems to have been on the back of Germany’s inflation data, which avoided the average forecast of a negative reading in September. It remained flat at 0.0%, which is not impressive neither, so one would have to wonder how strong the EUR can be based on a non-negative inflation reading.

Now, if there is near-term momentum and price does clear above 1.2720, it would break above these local resistance factors, and open up the 1.2760 level, 100-hour SMA and a previous resistance. The overall market in the medium-term would still be bearish, but we could be having some consolidation ahead of Thursday’s ECB meeting.

If EUR/USD price falls back below 1.2690, it is still pressured toward 1.2663, with downside risk even further. It should be noted that the 1.2660 level was a Nov. 2012 support pivot. Below this, we got some support/resistance pivots in the 1.24-1.2460 area, as explained below:

EUR/USD Weekly Chart 9/29
eurusd weekly 9/29

(click to enlarge)

Support:
The weekly chart shows that price has already broke below the 61.8% retracement of the 2012-2014 (1.2042-1.3993) rally. It also cleared the 2013 low of 1.2745, holding at the Nov. 2012 low for now. Below 1.2660, there is a support pivot at 1.24, a resistance pivot at 1.2442, and the 78.6% fibonacci retracement level at 1.2460.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.