The EURUSD continued its unclear moves last week, but after dipping to 1.2041 2 weeks ago, rebound from 1.2042 short term bottom is still in favor to continue and above 1.2404 will turn bias back to  the upside for 1.2750 (23.6% retracement of 1.4940 to 1.2042) as shown on the weekly chart below…

By studying the weekly chart, Williams indicator suggests possible gains during the next few coming weeks in short term, but the weekly RSI is negative and setting at 40 – even we have bullish divergence - any strong rise should happen after dipping toward/ below the psychological level 1.2000 first !!!
The last point about the weekly chart, we have bullish reversal candle of the week 22 July 2012, so I can summarize the weekly chart with these 2 points:

1- Any rise might happen now is supposed to be limited by 1.2750, and then followed by painful fall toward / below 1.2000/1.1850…. (Most likely)!

2- Any fall might happen now probably would be limited by 1.2000/1.1850 before attempting any rise toward 1.2700/1.3000 as weekly RSI suggests…

Let’s take a closer look by checking the daily chart:

With last Friday’s closure at 1.2385, Williams indicator suggested bullish breakout at 1.2400 , a daily close above this level would confirm the bullish breakout and should target 1.2750 levels easily !!!
But in return, a daily close below 1.2165 would mean that we had false bullish breakout and strong bearish move is expected at the opposite direction!!!

Now I can summarize the daily chart with these 3 points:

1- A daily closing above 1.2400 followed by RSI break above 60, would give us strong bullish momentum targeting 1.2750 zones…

2- A daily closing below 1.2165 followed by RSI break below 40, would give us strong bearish momentum testing g at least 1.2000/1.1850 zone maybe lower!!!

3- Next week we might witness range market between 1.2400/1.2165, but sooner or later it would break (up or down)!!!

Best Regards

Sunday 05 Aug 2012 09:27 PM