A critical level

FX:EURUSD   Euro / U.S. Dollar
80 0 1
The daily close on May 11 created a positive reversal setup on the RSI , targeting 1.13556 (on a closing basis) as the minimum objective. Intraday, that target was reached, but price has not yet managed to close at or above the target. If price fails again to close at or above the target price (even though intraday price highs are attained), I would have to view such price action to be a serious failure of a very high probability indicator setup. If we can't close at indicated levels by the end of this week, I would have to assume that the rally has found its top. This RSI signal's price targeting is an objective reading, not something that is subject to interpretation, and again, it's a very high probability signal.

My outlook after last week's close was that we would not reach new highs, but as my Elliott-based expectations failed to materialize on Monday, I began to suspect that we could reach the 1.1450-1.1500 area before any serious decline; the RSI signal convinced me that 1.1450 was indeed feasible. I believe it remains likely we'll reach that level, and will then have a strong shorting opportunity; I plan to take the first opportunity to go long to those higher numbers, then we'll see.

For those who are long, watch the daily close for the possible failure of the RSI setup; if such a failure develops (again), the decline could be sudden and swift.
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