EUR/USD (daily chart) as of October 26, 2012, has made a tentative downside breach of a bullish support trend line that extends back to the July 1.2040 2-year low. This unconfirmed breakdown occurs as the 100-day and 200-day moving averages have just touched, preparing for a possible crossover to the upside for the first time since the downside crossover occurred one year ago. This moving average cross resides just above the key 1.2800 support region, and serves as potential support for any further bearish extension. The 1.2800 level and the 200-day moving average have together served as a strong support confluence twice within the last month. To the upside, a bounce off support (supplied by either the trendline, moving average, or 1.2800 level) that moves back above the key 1.3000 psychological level could once again rise towards a resistance retest of the September 1.3170 high, with a longer-term potential upside objective around the 1.3500 price region.
James Chen, CMT
Chief Technical Strategist
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