EUR/USD Starts Week with 61.8% Retracement Pullback

Last week ended with the EUR/USD sliding from 1.3320 to 1.3155 before consolidating. Looking at the 1H chart, this broke below some short-term pivots, and pushed the RSI below 30, establishing bearish momentum. These are just initial clues to topping, but the market is at the crossroad because it did not even crossover the 200 hour simple moving average, and is still above a rising trendline ( which now can be broken with a dip below 1.3150). Also, we have pulled back to 61.8% retracement at about 1.3260, which coincides with a projected declining trendline. A break above 1.3260, with the 1H RSI breaking above 60 shelves the bearish outlook, and suggests further sideways action first, or even a bullish continuation.
Looking at the 4H chart, the bias is still bullish. The RSI has not broken below 40, and the decline has not broken below 61.8% retracement of the latest 5-wave upswing. So a break above 1.3260 could open up 1.33-01.3320 again, and if the RSI pushes back above 60, the bias is back to bullish and a break above 1.3320 can open up 1.35 for a target early this week. Breaking below 1.3150 opens up 1.30, below which extends the bearish outlook beyond the short-term.



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Fan Yang CMT is a forex trader, analyst, educator for IBTrade; and main contributor for FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.

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