POSSIBLE SCENARIOS TO WATCH TODAY
We continue with our comprehensive investigation on EUR/USD. The weekly chart shows, as we have said in immediately preceding post that the pair is just pulling back to the rising major trend line of a major rising channel. As a result a bounce off current levels or slightly lower should come with no surprise. But, unfortunately, we haven’t specified a trigger; we’ll in this post.
The four Hour chart shows clearly a breakout below the Symmetrical Triangle, a pull back to the breakout level, and a continuation of the prior decline after a failure to stay firm over the broken resistance line. The current correction is retracing, nearly, 50% of the prior rally, and prices are hovering around the lower declining support line. The RSI is declining, but the decline seems weak knowing that a short-term falling Wedge is materializing in the RSI itself. Note: the Mega oversold reading in the RSI, which considers a stand-alone major bearish signal, warns bulls that this time, a decisive conservative signal is needed before picking from a long side.
A rally may take place, off current levels, in both prices and momentum. Conservative traders shouldn’t buck the trend and their trigger will be a decisive up-breakout over this channel (see the circle). Short-term day traders may bet on this prospected bounce. A down-breakout below either the lower support line in the price or the lower declining line in the RSI will weaken the bullish bounce scenario.
Ramy Rashad, CMT