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Forexpros.com Daily Analysis - 26/05/2011

May 26, 2011 7:48 AM ET
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As I mentioned here yesterday, a correction in the US stock markets can weaken the US dollar, and so it happened. The reversal pattern in the daily is getting support at 1.40, and though a bear-flag occurred, it seems that the Euro is more likely to correct from this point, than to break down.

Stochastic levels indicating oversold, and a break-up of 1.4140 can cause the short-positions holders to close their position in market orders, and lift the Euro up.

Keep watching the movement of the 20 & 50 EMAs on the daily. A cross of the 20 EMA will signal for a bearish trend.


I have been following this pair for several weeks, looking for potential reversal trades. A possible enter was at the break down of 87.50, and it is not necessary too late to join in. The daily charts shows an obvious bearish trend which is followed by an accurate trading line and "lower high & lows" pattern.

The next support is at the round number- 87.0. If this support is broken, then this symbol might slide about 200 pips to 0.85.

Stochastic levels show that this is an excellent level for the sellers to go in, after shaking out the amateurs in the false break at 0.88.


New on Forexpros, the Currency Correlation Calculator!


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