(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.)
5/07/2010 - EUR/USD - After the dramatic drop this entire week (and especially on Thursday) that has established a new 14-month low around its expected 1.2500 support target, price action on EUR/USD (a daily chart of which is shown) has made an anticipated bullish correction. Despite this counter-trend correction, the strong bearishness that has characterized this currency pair for the last several days is likely not yet over. Price action on Thursday (5/06/2010) broke down swiftly below a dynamic support trendline extending from the October 2008 low, and closely approached its expected target around the 1.2500 price region, establishing a fresh 14-month low. Price action on Friday (5/07/2010) made a bullish correction back up to re-test the broken dynamic support trendline, but quickly retreated back down. Within the context of the strong and continuing downtrend in EUR/USD, any subsequent breakdown below 1.2500 could target further key downside support around the 1.2300 price region.
James Chen, CMTChief Technical StrategistFX Solutions
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