(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.)
2/17/2009 – EUR/USD – Price action on EUR/USD, a daily chart of which is shown, has just broken down substantially below a key uptrend support line extending from the 2 ½ year lows (around 1.2330) from late October. Although the pair has been entrenched in an overall long-term downtrend, this uptrend line was especially significant since it was touched precisely almost six times before finally being broken on the most recent daily price bar. The breakdown has confirmed a downtrend continuation. As noted in last Wednesday’s Chart of the Day (2/11/2009), in the event of a break below this trendline support, price should target further key support in the 1.2550 region, the level of the last major swing low in the pair. As of Tuesday (2/17/2009) morning, price has been hovering just above this support/resistance level. In the event of a significant break below the 1.2550 region, price could target the above-mentioned long-term support around 1.2330, which represents the 2 ½ year low reached in late October.
James Chen, CMT
Chief Technical Strategist
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