EUR/USD 1H Chart 7/2/2012 7:35AM EDT
The 1H EUR/USD chart shows a market that has been consolidating so far to start the week after Friday’s risk rally was capped under 1.27. The market found support at 1.26 entering the European session, and pushed back up to 1.2665 at the early onset of the session, but headed lower as the market gears up for the US session.
By 7:45 AM EDT, EUR/USD is pushing at the 1.26 handle, cracking it.
With a clear rejection from the upside at 1.2665, the market appears to be continuing the corrective decline. A break below 1.26 exposes the 1.2546-1.2550 area. This contains the 50% retracement level, the support pivot of a briefing consolidation period and the 200-hour simple moving average, which to me represents short-term mean price action for the last couple or so sessions.
Considering the market to be bullish, and only in a short-term correction, the 1H RSI should stay above 40. Therefore, if there is a confluence of price action around 1.2550 and RSI at 40, we can anticipate some support.
During the US session, if there is a pullback from under 1.26 before it reached 1.2550, let’s check if the market can hold it below 1.2610, where we have a near-term pivot. A rejection from an attempt to go above offers further signs that the market intends to continue the correction decline against Friday’s risk rally.
EUR/USD 1H Chart 7/2/2012 7:50AM EDT