EUR/USD Bounces off 1.3077 Pivot; Bullish Momentum Intact with Room to 1.32

The corrective decline yesterday did not last long as the market found support in the 1/27 Asian session at the 1.3075-1.3080 pivot area seen more clearly in the 4H chart. The 1H chart shows that this was between 38.2% and 50% retracement of the latest upswing from 1.2930 to 1.3183. The RSI shows that the bullish momentum established from that swing is intact as the reading stayed above 40 and is now pushing above 60. These are signs of bullish continuation as the market continues to trade in the rising channel. The 1.32 level is the upcoming resistance pivot.

Failure of the 1H RSI to tag 70 however will reflect a weak bullish intent and keep the market in a short-term sideways market although the bias is still bullish. The market did establish a near-term pivot at 1.3120, so if it falls below that in the US session, we should shelved the bullish continuation outlook to 1.32, and look for a short-term sideways if not bearish correction.

The daily chart shows that as we near 1.32, the RSI is also at 60, which means, if the market is to remain bearish, we should get a rejection soon to be followed with a more significant corrective decline than the ones we have seen in the rising channel. With the daily RSI above 60, the market should have more confidence to extend the current short-term uptrend. Therefore we can say that short-term bullish momentum is running into medium term bearish momentum as the market approaches the 1.32 pivot. A break above 1.32 opens up 1.3245, 38.2% retracement in the near term, but also opens higher resistance near 1.3627, 61.8% retracement and declining channel resistance seen on the daily chart.