(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.)
2/20/2009 – EUR/USD – After having broken down below a key uptrend support line early in the week, EUR/USD price action, as shown on the accompanying daily chart, has performed a classic pullback to the line. Like most pullbacks of this nature, price has stopped and turned back down right at the point of breakout, treating the broken support line as new resistance. This uptrend line should now continue to act as resistance, at least for the near-term. The potential trading trigger to watch for is any strong breakdown below the 1.2500 region, which represents the approximate level of the last low before pullback. A break below this level should confirm a downtrend continuation after the pullback retracement, potentially targeting further support in the 1.2330 price region, the level of the long-term low hit in late October.
James Chen, CMT
Chief Technical Strategist
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