EUR/USD Respecting Key Support

04/28/2010 12:01 am EST

Focus: FOREX

James Chen

Chief Technical Strategist, FX Solutions

Price action on EUR/USD, a daily chart of which is shown, has respected key resistance in the 1.3400 price region within a strong overall downtrend and has dropped back down to re-test strong support just above the 1.3250 region.


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; chart patterns in white; 50-period simple moving average in light blue.)

This occurs after price has consolidated within the past couple of days between these two support/resistance areas. The directional bias from a technical perspective continues to be bearish in line with the overall downtrend in the pair.

A subsequent daily close below 1.3250 would be a significant bearish indication that could target further immediate support to the downside in the 1.3100 price region. The noted strong resistance around 1.3400 should continue to act as key resistance within the context of the current downtrend.

By James Chen, chief technical strategist, FXSolutions.com

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