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Forex Trading Technical Analysis (2011/02/11) EUR/USD Head & Shoulders

(Please click on the forex chart thumbnail to enlarge)

2/11/2011 Forex Trading Technical Analysis (FXpath.com) -  EUR/USD (a 4-hour chart of which is shown) as of Friday (2/11/2011) has descended to key support in the 1.3500 price region, which is also in the approximate vicinity of the neckline of a clear head & shoulders chart pattern, as well as the 38.2% Fibonacci retracement of the last bullish trend run. Price is therefore at a critical juncture. The 1.3500 level currently represents a demarcation line between a bullish-biased continuation of the uptrend that has been in place since early January, and a bearish-biased breakdown of that uptrend. In the event of a breakdown below the 1.3500 level and the head & shoulders neckline, a major downside target resides around 1.3250, which is not only a key support/resistance level, but also the measured target for the head & shoulders pattern.

(Forex chart key: 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; Fibonacci levels in grey and/or light blue.)

James Chen, CTA, CMT (bio)

- Click here for my book, Essentials of Foreign Exchange Trading (Wiley).
- Click here for my book, Essentials of Technical Analysis for Financial Markets (Wiley).
- Click here for my video DVD set, High-Probability Trend Following in the Forex Market (FXstreet).

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