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Chart Of The Day | Forex Chart Analysis | James Chen
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December 15 – EUR/USD Daily Chart

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(Price on 1st pane, Slow Stochastics on 2nd pane; uptrend line in green; downtrend lines in red; horizontal support/resistance lines in yellow; chart pattern in magenta; 50-period simple moving average in light blue.)

12/15/2008 – EUR/USD – Dramatic bullishness within the last several days on EUR/USD (a daily chart of which is shown) has reached a significant downtrend resistance line (in red). This occurs after price broke decisively out of a triangle consolidation (in magenta) that has turned out to act as a strong support base for the pair.

There is no doubt that a major upside correction within the context of the general downtrend has indeed occurred. The real question now is whether a bonafide trend reversal is taking place.

A strong break above the downtrend resistance line would lend significant strength to this outlook. In the event of this break, the 1.3880 region should act as a key resistance level to the immediate upside. If there is a retracement of the recent bullishness, the 1.3300 level should act as substantial support to the downside.

James Chen

Chief Technical Strategist, FX Solutions

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