(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; downtrend line in red; horizontal support/resistance levels in yellow; 50-period simple moving average in light blue.)
6/02/2008 – EUR/USD – A sign has emerged that price action on the EUR/USD daily chart, as shown, has begun a potential correction to the downside after reaching the all-time high in late April. This sign is in the form of an unmistakable lower high that has formed within the last week. Together with the all-time high, this lower high forms the beginnings of what may become a significant downtrend resistance line (represented on the chart by the red line). Though price action is still considered to be stuck within a horizontal trading range (bounded by the top two yellow lines), the tentative downtrend resistance line in red is an indication that significant selling pressure (and perhaps some long-awaited dollar strengthening) may finally be entering into the equation. Any continued momentum to the downside would target strong support in the 1.5280 region, which is the bottom of the current trading range.
Chief Technical Analyst
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