(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.)
2/05/2010 – EUR/USD – Price action on EUR/USD, a daily chart of which is shown, has displayed continued marked bearishness recently, strongly confirming a new downtrend in the pair. This new downtrend was initiated after the previous long-term uptrend was broken decisively to the downside in early December. After that breakdown, the bearish trend has been characterized by several short-term bullish retracements and consolidations in the form of inverted flag patterns, but each time these trend interruptions were broken strongly to the downside. Having dropped below several important support levels, including the 1.4000 psychological price region and the key 1.3800 level, price has now reached a new 8-month low. Currently, a key support target to the downside resides in the 1.3400 price region. Upside resistance within the context of the strong bearish trend resides around the noted 1.3800 price region.
James Chen, CMT
Chief Technical Strategist
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