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EUR/USD Rebounds; Where to Fade the Rally?

The EUR/USD has signaled bearish continuation after consolidation throughout November.

(EUR/USD 4H Chart 12/8; click to enlarge)

Rebound From New Low: The 4H chart shows the pair breaking the 1.2360 low last week. Then, after a pullback, price action remained bearish and the market pushed to a new low at 1.2250 to start this week. As we wrap up the 12/8 session, price has rebounded back above 1.23. Note that a bullish divergence with the RSI is being resolved.

Now, price is no long oversold, but there still might be some near-term upside risk. However, if price approaches the 1.24 area, we should expect resistance. Here we have previous support pivots within November's consolidation. There is the 50-period SMA. There is also a falling speedline coming down from November's high near 1.26. Meanwhile, if the RSI is back near 60, we should expect resistance IF the EUR/USD is still bearish.

Bullish Correction Scenario: A break above 1.2460 on the other hand would break above these resistance factors as well as a resistance pivot from last week. This would put EUR/USD back into consolidation mode, with upside first back towards the 1.26 high in November. 

EUR/USD Daily Chart 12/8

(click to enlarge)

The daily chart shows EUR/USD in a downtrend, possibly forming a falling wedge. So, if there is a break above 1.2460, it is also breaking above this wedge pattern, which gives us another reason from another time-frame to consider a bullish correction, at least toward the 1.26 handle. 

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