EUR/USD 1H Chart 7/24/2012 7:20AM EDT
Last week, the EUR/USD made a new low on Friday (7/20) at 1.2140 before closing near 1.2150. After starting the week dipping down to 1.2062 on the Monday 7/23 US session, the pair recovered throughout the rest of the session but was held below the 1.2140 pivot.
The market has been very quiet so far during the 7/24 Asian-European session, entering the US session trading around 1.21. After the rebound, the market is no longer oversold in the near-term, as the RSI in both the 1H and 4H charts are above 30.
The preceding trend was bearish in the 1H chart, and the RSI reflects the bearish momentum, dipping to 30, but failing to break back above 60. Also the moving averages in the 1H chart are in bearish alignment, with the 200H SMA at the top, going progressively lower to the 8H SMA at the bottom closest to price action. This is true in the 4H chart as well.
During the 7/24 session, there is a lot of potential for bearish continuation.
But regarding upside risk, the market remains in bearish mode until a break above the declining trendline seen in the 4H chart. The market is likely to come against this trendline in the 1.22-1.2250 area, so a short-squeeze technically has an aggressive upside target to about 1.22, with some another pivot near 1.2160 before that.
EUR/USD 4H Chart 7/24/2012 7:25AM EDT