EUR/USD Continues Below Long-Term Channel

12/15/2009 12:01 am EST

Focus: FOREX

James Chen

Chief Technical Strategist, FX Solutions

Click to Enlarge
(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 continued its bearish stance after breaking down below the long-prevailing uptrend in the pair about a week ago. This occurs after price hit a 15-month double-tested high around 1.5140.

Coming off that high with a clear shooting star candle, price subsequently broke down swiftly below the key uptrend support line extending from the March lows, and then below short-term support around 1.4800. Currently, price is exhibiting signs of a potential bearish trend reversal, with the 1.4450 price region serving as a major downside support target.

To the upside, 1.4800 should provide significant resistance within the context of a potential new downtrend for the pair.

By James Chen, chief technical strategist,

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