(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; Fibonacci retracements in grey; 50-period simple moving average in light blue.)

1/23/2009 – EUR/USD – Steeply bearish price action on the EUR/USD (a daily chart of which is shown) has just reached a critical support juncture. This dynamic support extends from an uptrend support line (in green) that extends from the long-term low reached in late October. Any continued bearishness that breaks and closes convincingly below this support trendline should place the 1.2330 extreme support level squarely in the pair’s sights. Conversely, any clear bounce up off the current trendline support should meet strong resistance at the dynamic level of the downtrend resistance line (in red) that price has adhered faithfully to since the last major swing high that occurred in late December. Finally, in the event of a breakout above this downtrend resistance line, further key resistance resides in the significant 1.3300 region.

James Chen
Chief Technical Strategist
FX Solutions

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