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EUR/USD - A Bearish Signal Within a Choppy Market

In the 4H chart, the EUR/USD appears to have been bearish but choppy since mid-July. Price action has formed lower highs connecting several falling trendlines, 2 of those shown in the chart below.

EUR/USD 4H Chart 8/11


(click to enlarge)

Normally I look at the moving averages as well as a guide for resistance. As for the RSI I usually prefer to see it hold under 60 in a bearish trend. In this case however, price has climbed back above the cluster of 200-, 100-, and 50-period simple moving averages (SMAs), and the RSI has breached 60 and 70. Yet price action remained bearish.

There is risk of further upside correction. However, the might be more risk of bearish continuation after the reaction we saw in the 4H chart, granted it was in the Asian session. Perhaps we should wait for a session. Wait for another bullish attempt. If this attempt looks weak, we can have more confidence of the bearish outlook and fade the market towards 1.0850 and 1.08. 

The bottom line is, we are in an apparent downside in price action in the medium-term. There has been a short-term rally, and if the market is still bearish, the area around 1.10 should provide some resistance and possibly a pivot towards more downward swings.