(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; chart pattern in magenta; Fibonacci retracements in grey; 50-period simple moving average in light blue.)
5/19/2008 – EUR/USD – The daily chart for the key EUR/USD pair, as shown, has formed what appears to be an inverted pennant (in magenta) extending from the all-time high. Although flags and pennants usually occur in the midst of a trend and tend to act as a continuation of that trend, the current pennant is located near the tentative top after a record uptrend run. This could be hinting that price has indeed begun a bonafide reversal after reaching the all-time high last month. If this is indeed the case, a continuation in the direction of the inverted pennant with a clean breakdown of the formation would lend considerable strength to a bearish view on the pair. In this event the next major support to the downside is clearly in the neighborhood of the very significant support level around 1.5280.
Chief Technical Analyst
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