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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.)
Price action on EUR/USD, a daily chart of which is shown, has recently been in a continuing consolidation within the context of two parallel uptrend channels. The larger of the two channels extends from the beginning of the year, while the smaller one extends from early June.
Currently, price has found some support near the bottom portions of both these channels, and has also found some support around the 50-day simple moving average. Within the context of the current uptrend (on two scales), the 1.4450 region is the major upside resistance target, as it represents a seven-month high and the highest point in the current uptrend.
In the event of a breakout above this level, major dynamic resistance resides initially around the top of the smaller channel. Any significant breakdown below both of these channels, especially the larger one, would place the current uptrend in serious jeopardy, with the 1.3750 price region serving as major downside support.
By James Chen, chief technical strategist, FX Solutions
