FOREX: EUR/USD Upper Trading Range Resistance Being Challenged

Although there have been a couple of weeks of US dollar weakness, technically the EURUSD currency pair is still in a long term down trend. Currently it is locked inside the trading range that was created between October 28th – 30th/08 with a low at 1.2326 and a high of 1.3298.

The top of the trading range resistance is now being challenged. A break of the trading range to the upside does not necessarily mean a resumption of the long term Euro uptrend.

There are a couple of layers of strong resistance nearby. There is a zone of resistance from 1.3400 – 1.3640. An even stronger resistance level sits around 1.3900.

If the top of the range at 1.3300 is broken, shortly afterwards there will most likely be a few days of downward correction before Euro bulls attempt to move the market higher.

On the down side there is minor support at 1.3079 followed by 1.2800.

Any break below 1.2545 would signal a probable resumption of the down trend.


EUR/USD chart as at 11 December 2008 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS

Stochastic – has moved into the over bought level.
NextView RSI – nearing overbought, but at the same time indicates the downtrend is still in effect at this time.
Trend Line – the three month old declining trend line comes into the area of R`, adding additional resistance to this zone.

R1 – resistance zone between 1.2300-1.3640.
R2 – 1.3900
S1 – support at 1.3079. (not yet confirmed until there is a close above this level).
S2 – 1.2848
S3 – 1.2545

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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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