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Is EUR/USD Topping At 1.37?
Written by article default Wednesday, 09 February 2011 14:22
EUR/USD
- The EUR/USD rallied as expected from 1.35, and has topped off near 1.37 as anticipated in our previous report on the EUR/USD as well as in our video post yesterday.
- The 1H chart shows the rally held at 50% retracement at 1.37, where the 200SMA resided as well.
- The decline so far has been unconvincing as it broke the rising channel sideways instead of sharply downwards, so the bearish continuation scenario still looks weak and premature at the moment.
- The 1.36 clip remains as near-term support, so we need to see the market break below this, and offer a failed rally, preferably below the 1.3620 area, establishing a top or completion in the retracement pattern.
- The RSI should dip below 30 if the bearish continuation is to materialize.
- At the moment, the bearish target is the 1.3550 area. We can let it extend to 1.35, but we should consider a possible rally from there.
- If 1.35 is broken, then we can look at 1.34, and 1.3250 as our next targets. The upside risk within this bearish scenario is a rally towards 61.8% retracement level near 1.3730. Above that, the bearish scenario should be put aside.
- The 4H chart shows an engulfing candlestick action as a reversal signal. If the subsequent candles doesn’t reverse this move more than 61.8%, we should have topped, and looking to 1.3550 in the near-term.
