FOREX: EUR/USD Bullish Move is Unlikely Over

This currency pair found resistance near the 200 day moving average that was identified in last week’s column. Although the market has fallen off sharply from this area, it’s highly unlikely that the bullish move is over.

Following is a reasonable scenario for price action on the chart over the next several days.

1) There is potential for the market to rise, but that rise should not take out the recent high at 1.4429. More likely the rally will halt not higher than 1.l4290, but possibly not higher than 1.4120.

2) After a correction to the sharp drop we noted in 1), the market should drop to find support in the zone between 1.3720-1.3290.

3) Following the downward move as in 2), the market will rise to test 1.4419 and then the September high of 1.4807.

4) If the market surprises, and drops below the support range mentioned in 2), the market will still have upward potential as long as value remains above 1.3080. If 1.3080 is penetrated (not expected), it would end the near term attempt for a new high.


EUR/USD chart as at 24 December 2008 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS
MACD – up, but weakening.
Stoch. – dropping from its’ overbought level
200MA – exerting temporary downward pressure
20EMA – represents short term buying interest.

****

Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.
Upcoming Workshop from Don Schellenberg:
Trade and Prosper in FOREX by Don Schellenberg | 8 Jan 2009 (Kuala Lumpur) | 17 - 18 Jan 2009 (Kuala Lumpur)
Trade and Prosper in FOREX by Don Schellenberg | 3 -4 Jan 2009 (Singapore)