(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.)

6/15/2009 € EUR/USD € Price action on EUR/USD, a daily chart of which is shown, has formed a rough head & shoulders pattern that hints at a significantly bearish reversal potential if price is able to continue its break below the 1.3800 region. The H&S pattern is rough because the right shoulder is significantly higher than the left shoulder, while the neckline is relatively flat. In any event, a strong breakdown below the neckline with follow-through should target further support in the 1.3550 price region. In the event that the head & shoulders pattern fails to complete with a strong neckline breakdown, upside resistance resides around the 1.4050 region.

James Chen, CMT
Chief Technical Strategist
FX Solutions

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