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EUR/USD - Weekly Forex Analysis for Jul 20-24, 2009

EUR/USD (a daily chart of which is shown) spent this past trading week essentially continuing its consolidation within what has turned out to be a significant, well-formed triangle pattern that began from the double-tested high back in early June. Towards the end of last week, price had reached up to the upper border of this triangle, and had threatened a breakout to the upside. By the close of the week, however, the pair had retreated slightly, to just under the upper border once again. The current consolidation notwithstanding, price can still be considered to be in general uptrend mode, with signs pointing to a potential impending uptrend continuation. Any bonafide breakout above the upper border of the triangle during the upcoming trading week of July 20-24 would lend significant strength to this bullish outlook, especially if price then goes on to breakout above the last swing high around 1.4200. In that event, the clear upside resistance target would be the uptrend high around 1.4335. And any breakout above that level would confirm an uptrend continuation for the pair. To the downside, dynamic support continues to reside around the lower border of the triangle consolidation, with further key support around the major 1.3750 price region. Any subsequent breakdown below that important support/resistance level would likely invalidate, and possibly reverse, the current uptrend.

- James Chen, CTA, CMT

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