Bearish price action on EUR/USD, a daily chart of which is shown, has begun the new trading week by reversing much of the gains it made during the bullish correction of last week.
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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.)
This occurs within the context of a strong and steep overall downtrend. Monday’s price action broke down below the key 1.2500 price level, as well as below a short-term uptrend support line that represented last week’s bullish correction.
With continued bearishness on this breakdown, price could initially target last week’s newly established four-year low in the 1.2140 price region.
Below that level, the key downside support target to watch would be the 1.2000 price region, which represents a significant technical and psychological price target level.
By James Chen, chief technical strategist, FXSolutions.com
