(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; 50-period simple moving average in light blue.)
5/01/2009 € EUR/USD € EUR/USD (a daily chart of which is shown) has continued to adhere closely to a long-term downtrend resistance line extending from the second test of the 1.6 all-time high that was hit back in July 2008. Currently, price has once again poked slightly above the trendline before retreating back down. The pair is currently at a critical directional juncture as of the outset of the month of May. If the long-term downtrend fails to convincingly break and close to the upside (currently around the 1.3300 level), the overall trend will remain as a downtrend. In this event, price should be looking to move lower, potentially targeting major support around 1.3000 and then 1.2900. Conversely, any substantial breakout above the long-term downtrend resistance line would be a significantly bullish indication, where price could subsequently target further resistance around 1.3550 and above.
James Chen, CMT
Chief Technical Strategist
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