(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; chart patterns in white; 50-period simple moving average in light blue.)
2/25/2009 – EUR/GBP – Though it can technically be considered in a medium-term downtrend since the beginning of the year, EUR/GBP, a daily chart of which is shown, has continued to respect an uptrend support line extending from the late October low just below 0.7700. Therefore, the pair is currently still entrenched in a longer-term uptrend until any substantial breakdown of this trendline occurs. The fourth touch and bounce off this line occurred just in the last couple of days, and has gone on to break out above a very short-term parallel downtrend channel. At the current juncture, if the bullishness of this week continues and price extends its bounce off uptrend support, price should meet strong resistance in the 0.9070 price region, a significant prior support/resistance level. To the downside, support for the near-term should continue to reside around the dynamic level of the uptrend support line. In the event of a breakdown of this line, price should target further support in the 0.8650 region.
James Chen, CMT
Chief Technical Strategist
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