Technical Look at EUR/USD Daily Chart

08/06/2009 12:01 am EST

Focus: FOREX

James Chen

Chief Technical Strategist, FX Solutions

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(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.)

The key breakout above 1.4335 that occurred in the beginning of this week on EUR/USD, a daily chart of which is shown, has not followed through as of yet. Instead, price has consolidated right above the point of break.

Though this breakout represents a tentative continuation of the uptrend that has been in place since early March, the move will have failed without a subsequent breakout above the 1.4445 high that was reached after the prior uptrend high of 1.4335 was broken on Monday. If a breakout above 1.4445 indeed occurs, a significant upside resistance target resides around the 1.4570 price region.

Any breakout above that level would constitute a substantial bullish indication for the pair, which could eventually reach up towards further resistance in the 1.4900 price region.

By James Chen, chief technical strategist, FX Solutions