EUR/USD – Falling Channel vs. Rising Trendline

by Admin

Awards 2013

EUR/USD 4H chart 2/25/2013 9:25 AM EST


Falling Channel: The EUR/USD has been falling from 1.3710 throughout February, reaching a low of 1.3144 to end last week (2/22). The latest downswing cracked a rising trendline that goes back to July. However, instead of clearing it, the market consolidated around it to end the previous week. To start this week, the EUR/USD is pushed back above the trendline, and there appears to be a minor bottoming effort as we get into the 2/25 US session.

Still the falling channel is holding structure with bearish momentum. If the 4H RSI reading pops up above 60, and price pops up above 1.34, then we are likely to have a breakout from the falling channel.

Rising Trendline: The daily chart shows the market also respecting a rising trendline that goes back to July 2012, the start of the latest bull trend. As noted, we did crack the TL, but the daily chart shows eventually a reaction of support so far. Without this trendline truly broken, and the daily RSI still holding above 40, the bullish trend is still intact in the daily chart.

So we have the EUR/USD at the crossroad. Breaking above 1.34 is a sign of bullish continuation, while holding below it, followed by a swing below 1.3144 should be a sign of trendline breakdown, which suggests further bearish correction.

EUR/USD Daily chart 2/25/2013 9:26AM EST