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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; chart patterns in white; 50-period simple moving average in light blue.)
As of Wednesday (Feb. 17), price action on EUR/USD, a daily chart of which is shown, has begun to re-assert its bearish stance within the context of the pair’s overall downtrend. This occurs after price made a swift and strong bullish correction on Tuesday, reaching up to approach significant resistance in the key 1.3800 support/resistance price region.
After the bullish correction was rejected from that price area on Wednesday, the pair is potentially poised to resume the downtrend that has been in place since the breakdown of the prior uptrend in early December. A strong breakdown below the 1.3600 price region could initiate a bearish continuation targeting key downside support in the 1.3400 price region. In the event that this target is hit in the very near future, a new nine-month low will have been established.
With continued bearish trend action below 1.3400, further key support to the downside resides around the 1.3100 price region. Upside resistance within the context of the current strong downtrend continues to reside around the noted 1.3800 support/resistance price region.
By James Chen, chief technical strategist, FXSolutions.com
