(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.)
3/25/2009 € EUR/USD € Price action on EUR/USD, a daily chart of which is shown, has been consolidating this week in a flag pattern formation after the strong bullish run of last week. The current flag consolidation occurs right around a key long-term downtrend resistance line extending from the second test of 1.6 in July of last year. Any strong breakout above this downtrend resistance line, and then a subsequent breakout above the top border of the current flag, would provide significant indication of a potential bullish change in the overall trend. In this event, price should target further resistance in the 1.3850 price region. To the downside, the bottom border of the flag should serve as near-term support for the pair, with the 1.3300 region serving as even stronger support further to the downside.
James Chen, CMT
Chief Technical Strategist
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