(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.)
2/09/2009 – EUR/USD – EUR/USD (a daily chart of which is shown) has made a pronounced bounce up off a key uptrend support line extending from the lows (around 1.2330) hit in late October. This constitutes at least the fifth precise bounce off this line, which makes it an exceptionally valid dynamic support level. In the process of making this bounce, price has also broken out above a steep downtrend resistance line extending from the 1.4700+ high hit in late December. The prevailing overall trend, however, is still down. Current price action likely represents a minor bullish retracement within this general downtrend, or at least a trading range consolidation. If so, the 1.3300 region should provide strong near-term resistance. Conversely, a subsequent fall back down should meet continued support at the noted uptrend support line. Any breakdown below this line should continue the overall downtrend, targeting further key support in the 1.2550 region.
James Chen, CMT
Chief Technical Strategist
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