(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.)
5/21/2010 – EUR/USD – Price action on EUR/USD, a daily chart of which is shown, has made a significant bullish correction during the latter half of this week to hit the week’s high at 1.2670 (as of Friday morning, 5/21/2010, New York session). This occurs within the context of a strong overall downtrend in the pair, and after price hit a 4+ year low at 1.2142 in the middle of the week. Despite the current bullish correction, the technical outlook on EUR/USD continues to be bearish in line with the strong overall downtrend. If price breaks down below uptrend support on this bullish retracement, returning below the important 1.2500 support region, the key further downside support level to watch resides around the pivotal 1.2000 price region. This bearish target is an important technical and psychological level, and also coincides with a 161.8% Fibonacci extension level of the recent bearish run from 1.3347 to 1.2519.
James Chen, CMT
Chief Technical Strategist
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