Forex: EUR/USD Expected to have Additional Momentum Upwards

At time of writing, the weekly price bar (or candlestick) is not yet complete. The weight of evidence is that EURUSD is still in a down trend. The trading range is confined between the first levels of resistance and support, quite near the current price.

The first level of Resistance is at 1.2819.
The first level of Support is at 1.2532.

The 200 week Simple Moving Average (SMA) is totally flat, which implies that it would probably be a resistance level if price reaches that high.

Price is currently nearly 200 pips below the 50% level of the six week trading range.

On the chart there is some momentum to the upside.

My expectation is that there will be additional momentum upwards, that is a correction of the strong bearish move that began on November 26/08. As long as the major pressure is still to the down side, 1.2880 should cap movement to the upside.

Since the trading range has not yet been exceeded either to the up or down side, position traders should exercise extra caution. Meanwhile, there are ample opportunities for intraday traders to enter profitable trades within the trading range.


EUR/USD chart as at 4 November 2008 using NextVIEW Advisor. Click on chart for bigger view.

TECHNICALS

NextView RSI – flat at the 50% level.
Stochastic – flat with a bearish bias.
20 EMA – precisely where price is on the daily chart.

R1 – a resistance zone between 1.2819 – 1.3115.
R2 – 1.3400
S1 – support zone between 1.2532 – 1.2326.
S2 – 1.2045 – not shown on the chart.

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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.


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