Euro Dollar / US Dollar (EUR/USD) Analysis

Last week when this currency pair was towering up to 1.4908 after printing a new low at 1.4569, many analysts were exclaiming that the low was in place and the upward trend of the Euro was resuming. At the same time, this column was suggesting more movement to the down side should be expected.

Today a similar scenario is unfolding on the chart. As I write, there is a new low for the market, But there is not a new high. So, until proven otherwise the suspicion remains that more down-side, or at least sideways action will develop during the next week.

For the short-term there will no doubt be some buying opportunities. Last week’s first up-side target stopped the rally, and still remains as a point of resistance to the current up-move. Beyond that is potentially stronger resistance around 1.5000-1.5040.

TECHNICALS

Trend-Line – the market is still a short distance away from the rising trend-line. It may come into play again if the market fails to penetrate the nearby zones of resistance.


EUR/USD Daily chart as at 28 August 2008 using NextVIEW Advisor

R1 – nearby resistance at 1.4900
R2 – resistance at 1.5000-1.5040.
R2 – resistance at 1.5300

Resistance at R1 looks vulnerable. A rise beyond 1.4900 will target at least 1.5000-1.5040. Next significant resistance is at 1.5300.

EMA20 – A close above this EMA should be in place before more aggressive longs are considered.

Stochastic – The positive divergence of this indicator, and it’s rise above it’s oversold zone, implies at least some up-side movement for this pair should be anticipated.

Commentary and Analysis by Don Schellenberg