Trendline broken: The rising trendline that has held the bullish price action of EUR/USD since last week (12/10) is broken, as seen in the 1H chart. However, the break is sideways so it is not yet a sign of reversal, but just a reflection of a sideways consolidation, between roughly 1.33 and 1.3188. As we begin the 12/21 US trading session, the EUR/USD is stalling at the consolidation support.
Momentum, structure: The bullish momentum is lost in the 1H chart with the RSI being able to break below 40. However, a break below 30 is needed to be a sign of bearish momentum. Looking a the consolidation range again, note the middle is around 1.3245. A hold below this area can be a sign of bearish intent, while a break above 1.3250 gives a bullish bias to the sideways consolidation.
Double top: If price falls below 1.3180 and the RSI below 30, it is likely a start of some bearish correction. Also note that this could be assessed as a double top, which introduces a short-term correction.
Targets: The 4H chart shows the breakout projection toward 1.3070-80 area, but we have some key levels to monitor above that as well at the 1.31 handle to 1.3125 previous resistance pivot area. 50% retracement of December’s rally is at 1.3090.
EUR/USD 4H Chart 12/21/2012 8:50AM EST