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EUR/USD Fails to Break Lower; Consolidation Ahead

Yesterday, the EUR/USD was bearish after the ECB statement and press conference. It looked like the prevailing bearish trend still had its grip on the pair. However the 8/7 session ended with a failure to reach the 8/6 low of 1.3333. Then traders during the 8/8 session started to bid up the EUR/USD. The failed bearish continuation is a sign that the market is ready for consolidation.

EUR/USD 1H Chart

In the 1H chart, you can see that the pair is seeking a mini price bottom. Price is pushing above the 200-, 100-, and 50-hour SMAs, pushing above 1.34, and the RSI is pushing above 60. These are all signs that the bearish trend is slowing. 

If EUR/USD enters consolidation and builds a mini price bottom, we should expect some buyers at 1.3365, a local support.resistance pivot. That would show us indeed bulls are in chart in the near-term to kick off a bullish correction attempt. 

If price holds above 1.3365, and pushes back above 1.34, we can anticipate a bullish correction toward the 1.3444 high from last week. The ability to reach that high would further confirm that the market is in consolidation. 

If the bullish correction pushes above 1.3445, we should monitor the 1.3475-1.35 area for resistance. This area could be reinforced by a falling trendline seen in the daily chart, which currently shows a bullish divergence with the RSI and price. 

EUR/USD Daily Chart

A break below 1.3360 should be a sign that price is not in consolidation, or is in a very flat one. Price should then focus back toward the 1.3333 level, with downside risk to the Nov. 2013-lows around 1.3295-1.33.