Rising Wedge Pattern in EUR/USD
03/19/2010 12:01 am EST
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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.)
Price action on EUR/USD, a daily chart of which is shown, has formed a rising wedge pattern within the context of an overall downtrend extending from the early-December high.
This rising wedge occurs after price was once again rejected by 1.3800 resistance, and is a potentially bearish formation that is contingent upon a significant break to the downside. In the event of this strong bearish breakdown, which would lend strength to the robust prevailing downtrend, a key support target to the downside resides in the 1.3400 price region.
Any further breakdown below that level would lend confirmation to an overall downtrend continuation. To the upside, the noted 1.3800 price region should continue to serve as resistance within the context of the current downtrend.
By James Chen, chief technical strategist, FXSolutions.com