(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.)
5/11/2010 – EUR/USD – Price action on EUR/USD, a daily chart of which is shown, has begun once again to resume its bearish stance after having made a sharp bullish correction up to approach strong resistance in the 1.3100 price region in the beginning of this week. The current bearish resumption occurs after last week’s dramatic plummet down to approach key support in the 1.2500 price region that established a new 14-month low for the pair. Although Monday’s bullish correction up to 1.3100 was swift and substantial, it quickly retreated and has turned out thus far to be a failed recovery. The technical bias for this currency pair currently remains bearish in line with the accelerated overall downtrend. Clearly, the noted 1.2500 key level remains the downside level to watch, as a breakdown below it would confirm a downtrend continuation. If this breakdown occurs, price could potentially target further downside support in the 1.2300 price region. To the upside, within the context of the strong current downtrend, key resistance resides in the 1.2900 price region.
James Chen, CMT
Chief Technical Strategist
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