(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.)
6/04/2010 - EUR/USD - Looking back at the month of May 2010, price action on EUR/USD (a daily chart of which is shown) continued its strong downtrend with a steep plummet that culminated in a consolidation above newly-established support in the 1.2150 price region. Although there were certainly some substantial bullish corrections within May's very bearish overall price action, the month ended over 1000 pips below where it began. Indeed, May saw price establish a new 4-year low, only to have that long-term low broken slightly just a few days later on June 1st. As of the beginning of this new month, the technical bias for the month of June 2010 appears to be indicating further potential bearishness for the pair. Short-term support in the 1.2150 price region has just been broken significantly to the downside, completing a descending triangle bearish continuation pattern and approaching key support in the 1.2000 price region. While additional bullish corrections are to be expected, if 1.2000 is broken convincingly to the downside, further support targets around the 1.1800 and then 1.1600 price regions are clear possibilities for the rest of the month. If, in fact, 1.1600 is reached, a 6+ year low will have been established.
James Chen, CMTChief Technical StrategistFX Solutions
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