EUR/USD Forms Negative Reversal

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  • 4H and 1H: The 4H chart shows the market in consolidation, rallying with force since hitting 1.2650. This price action is within a larger range between 1.2580 and 1.2920.
  • The RSI shows a bullish divergence. Although the RSI jumped up, the price level has yet to confirm with another 4H bullish candle. If the current 4H candle does not rally pass 1.2770, we should remain in consolidation.
  • The 1H chart shows the market in consolidation as well, but with a bearish bias since the RSI dipped below 30 and could not come back up above 60. It tested the 60 level, which is higher than the previous 2 highs in the RSI. However the price highs corresponding to this new RSI peak is lower than the previous price highs.
  • This is a negative reversal, and a suggested swing targets the 1.2620 area.
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  • Day: The daily chart shows that the market is short-term bearish but now stuck in consolidation. This short-term bearish action is still within an intermediate term bullish mode unless it breaks below the 1.2450 area.
  • In this case, if the RSI also breaks below 40, or even 30, we are in a bearish mode in the intermediate term as well, and possibly returning to a longer term decline in the EUR/USD that started in 2008 from the 1.60 level.