width=398(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; 50-period simple moving average in light blue.)

11/03/2009 - EUR/USD - Price action on EUR/USD, a daily chart of which is shown, has finally made a tentative breakdown below the key uptrend support line extending from the March lows. While this downside breach is significant and raises important questions as to the future direction of this pair, the prevailing uptrend is still technically considered to be intact. Today's breach represents a weakening of conviction on the part of the EUR/USD bulls (dollar bears), and suggests indecision in the market and a potential continued consolidation. Any continued bearishness on today's tentative breakdown should target strong support in the 1.4450 price region. And any further breakdown below that level should indicate a potential trend reversal to the downside. To the upside, major resistance currently resides around the 1.4850 price region. If price subsequently retests and respects that resistance level, a potential head & shoulders reversal pattern could possibly be in the making. Any confirmation of the current prevailing uptrend would only occur on a breakout above the 1.5060 14-month high.

James Chen, CMT
Chief Technical Strategist
FX Solutions

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