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EUR/USD Bounces off 1.11

The EUR/USD consolidated last week ahead of the ECB meeting. Afterwards the bank announced details of its bond purchase program (QE), the euro fell across the board and the EUR/USD continued its prevailing downtrend.

EUR/USD 4H Chart 1/26
(click to enlarge)

The 4H chart shows that the pair came down to 1.11 before forming a bullish divergence with the RSI, which was at oversold levels. As we get started in the 1/26 US session, the pair is rallying.

If the current rally extends above 1.13, it will expose the 1.1460-1.15 support area of last week's consolidation range. We also see the 50-period SMA there, so monitor this area for sellers if EUR/USD approaches it. Also, we should monitor the 4H RSI and see if it approaches 50-60 area. Then if it stalls and turns down, price action is also likely ending the bullish correction cycle and starting a bearish continuation swing.