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EUR/USD Retreating - 1.27 Will be Key

In October, EUR/USD rallied from 1.25 up to 1.2887. This rally has brought some short-term bullish momentum and took away some prevailing bearish bias with price failing to stay under the 200-, 100-, and 50-period simple moving averages in the 4H chart seen below.

EUR/USD 4H Chart 10/21(click to enlarge)

This week, price attempted to rally back toward that 1.2887 high, but retreated under a more common high around 1.2850. This keeps the EUR/USD from further bullish correction, and threatens a bearish continuation. However, the 4H chart shows that there is still a rising trendline, and a previous support/resistance pivot around 1.27, which is a key level for EUR/USD's short-term outlook. 

A break below 1.27 could revive the bearish outlook, at least toward 1.25 especially if the 4H RSI falls below 40. A subsequent failure to pull back above 1.28 might help confirm the bearish continuation outlook. 

If price holds above 1.27, there is still pressure toward the 1.2887-1.29 area. Still, this rally should be interpreted as a bullish correction against a prevailing downtrend, which is still intact.