EUR/USD Poised to Retest Important Level

05/29/2009 12:01 am EST

Focus: FOREX

James Chen

Chief Technical Strategist, FX Solutions

(Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; 50-period simple moving average in light blue.)

Price action on EUR/USD (a daily chart of which is shown), despite a bearish correction, continues to traverse a steep, short-term uptrend channel. This correction occurred after price retreated earlier this week from the key 1.4050 resistance.

Currently, the pair is attempting to regain the ground lost during the correction and appears poised to re-test the 1.4050 target once again. A breakout above that level, which represents the 2009 year-to-date high, would confirm a continuation of the parallel uptrend channel, targeting further major resistance around the top of the channel, and then potentially around the key 1.4300-1.4350 support/resistance region.

Dynamic downside support within the current uptrend continues to reside around the bottom border of the uptrend channel.

By James Chen, Chief Technical Analyst, FX Solutions

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