EUR/USD 1H Chart 9/19/2012 9:20AM EDT
Double top: After the completed double top, the EUR/USD had a pullback during early 9/19 Asian trading. The pullback respected the support of the double top as resistance, and was followed in the 9/19 European session with a decline to 1.30.Note that the RSI reading was also held under 60, a sign that the bearish momentum is held, and when the reading kissed 30, that was a sign that the bearish momentum is indeed building.
Pullback: There is a chance for a pullback from the 1.30 psychological handle. But if the market holds below 1.3080, especially if it remains under 1.3050 and the declining trendline seen in the 1H chart, the focus will continue to be on the 1.30 handle with bearish intent in the short-term. A break below 1.30 will be followed by a challenge from the September rising trendline, but the next support pivots will be at 1.2875 and 1.2815.
A pullback above 1.3085 however makes the near-term bearish outlook unclear, and puts the focus back to the 1.3170 high.
Momentum: When we look at the 4H chart, we should note that the RSI reading has been held above 40 during the rally in August through mid-September. Look for support also when the RSI reading nears 40.
More consolidation/correction: If the RSI falls below 40 this time around, watch out for the lost of the medium term momentum. In this scenario, we are likely in a sideways market. Only a break below 1) 1.26, 2)the rising trendline seen going back to July in the 4H chart, should introduce the bearish outlook.
EUR/USD 4H Chart 9/19/2012 9:25AM EDT