EUR/USD Trading at 50% Retracement

by Admin

Awards 2013

EUR/USD 4H chart 7:45PM EDT 4/23/2013


50% Retracement: The EUR/USD failed to rally above 1.31 falling from 1.3083 during the Asian-European session to 1.2972, tagging the 50% retracement (of the 1.2744-1.3201 swing). In the 4H chart, it also tagged the 200-4H SMA. While these two levels are not necessarily support, they represent mean price action. With the 200-SMA being flat, mean price action could also be assessed as “neutral” price.

More retracement: Looking at the bigger picture, the market has made a reversal swing in April against a bear run from 1.3710 to 1.2744, thus flattening the momentum and the 200-4H SMA. While the April upswing looks very sharp and has potential of extending in the medium term, there remains short-term downside risk toward 61.8% retracement at 1.2919 or even a deeper retracement to around 1.2842, 78.5% retracement.

Bullish continuation: At this point, a rally back above 1.3050 might neutralize this short-term bearish outlook and a rally above 1.3083 could reflect a revival of the bullish outlook, opening up at least the 1.32 high. While a bullish divergence with the RSI around 30 is not necessary for a reversal back to the April uptrend, it could help identify the end of the current bearish correction cycle.