Forex Technical Analysis – EUR/USD Correction to 1.2150
(Please click on the forex chart thumbnail to enlarge)
6/13/2010 Forex Technical Analysis (FXpath.com) – EUR/USD, a daily chart of which is shown, made a significant bullish retracement for most of last week to hit a high of 1.2150 on Friday (6/11/2010) after reaching a new 4-year low at 1.1875 earlier in the week on Monday (6/07/2010).
Last week’s bullish retracement continues to exist within the context of a strong and steep overall downtrend, and can still be considered merely a minor counter-trend correction in the midst of a heavy bearish bias for this currency pair. Unless and until price action tells otherwise, EUR/USD is still very much entrenched within a bear market.
The 1.2150 retracement high that was reached last Friday represented key resistance from the prior support established by the bottom of a bearish descending triangle pattern. This triangle was broken to the downside on the prior Friday. Even if price action continues its bullish correction in the coming trading week, a key dynamic price event to watch for would be a clean breakdown of the short-term uptrend support trendline extending from the noted 1.1875 4-year low, that represents the dynamic support line for last week’s bullish correction. In the event of this trendline breakdown and a clear re-breakdown below 1.2000, a significant downside support target resides in the 1.1800 price region.
UPDATE: As of Monday morning (6/14/2010) New York session, price action has made a clear bullish run to start the new trading week. The current bullish correction, therefore, is still firmly in place, and a breakdown of the correction’s support has clearly not yet occurred. Key upside resistance on this correction currently resides around the 1.2450 price region. Any subsequent breakdown of the correction’s support continues to be the bearish event to watch for if trend-trading in the direction of the longer-term overall downtrend.
(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.)
James Chen, CTA, CMT (bio)
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horizontal support/resistance levels in yellow, how are they calculated?