(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; horizontal support/resistance levels in yellow; Fibonacci retracement levels in grey; 50-period simple moving average in light blue.)
4/07/2008 EUR/USD Dynamic support and resistance in the form of diagonal trendlines can often describe price action exceptionally well. On the EUR/USD daily chart, as shown, the highest uptrend line (in green, labeled 1) extends right through the center of price action, depicting the angle of ascent in a very precise manner. A solid trendline like this often acts convincingly as both support and resistance at various times during its lifespan. Starting out as support back in August 2007, this line turned into resistance after a breakdown, then support after a breakout, and is now acting once again as resistance, as of this writing. Therefore, barring another breakout to the upside to challenge the all-time double-top high reached within the last several weeks, the abovementioned trendline should continue to act as resistance for the near-term. In the event of a move back down, clear support to the downside resides around the last low in a newly-forming horizontal trading range (in yellow, labeled 2). This low is in the 1.5350 region and coincides with a key 38.2% Fibonacci retracement level (the low-to-high retracement span being measured from the low on 2/7/2008 to the all-time high reached on 3/17/2008).
Chief Technical Analyst
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