EUR/USD 1H Chart 8/8/2012 6:35AM EDT
The EUR/USD continues to trade in a range between the Friday’s (8/3) high at 1.2442 and than Monday (8/6) low at 1.2340. So far we have 2 tests of the 1.2442 level and about to be a second test of the 1.2340 support. The RSI reading in the 1H chart is stepping on 40, a break below which reflects loss of the bullish momentum established by the recent bull swing from last week.
If the market breaks 1.2340, we do have the 1.23-1.2330 area as a challenge. This was the resistance area for price action since July 9. A break below 1.23 exposes the rising trendline connecting the July low with the August low, seen in the 4H chart. Declining price would probably meet this trendline around 1.22. A range breakout projection, using the width of the range targets 1.2240.
Going back to the 1H chart, if the market pushes back above 1.2375, the market is likely intending to test the 1.2440 range resistance again. In this scenario, we are likely going to also test a declining trendline (from June 20 high of 1.2740) in the 1.2440-1.2450 area.
In the near-term a break above 1.2440/50 likely opens up the 1.25 handle, with a break above that exposing first the breakout target of 1.2540, then the resistance pivots at 1.2692 and 1.2750.
EUR/USD 4H Chart 8/8/2012 6:40AM EDT