FOREX: EURO CONTINUES TO LOSE ITS VALUE AGAINST THE US DOLLAR

The Euro has continued to lose value against the US dollar. Important technical levels of support have been broken on the way down.

Key support on the daily chart, at 1.3030, was broken, however a lower level of support on the weekly chart has not yet been touched by recent price action. That is the area around 1.2721 – 1.2700.

The probabilities for this week are not yet entirely clear. Even though the market is due for a larger move up, there is still the possibility of a further move down to test weekly support at the November 20th low of 1.2422.

If the market drops to 1.2721-1.2700, we should see a relatively strong upward move that will break the down sloping trend line on the chart. That could mark the beginning of a multi-day trend which will probably eventually rise to test the December 16 high of 1.4719.

The ideal downside target, near-term, is 1.2700, but any bullish move that breaks through the resistance at the trend line and can close above 1.3388 may have sufficient momentum to trigger a longer term bullish move.


Daily EUR/USD chart as at 22 January 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS

Stochastic – oversold
NextView RSI – in negative territory, below it’s long term moving average.
200 MA – sloping down, reinforcing the fact of the down trend.
20EMA – short term moving average, strongly down.
Trend lines – The market has moved down wards in a clear trend channel, the upper line providing potential resistance and the lower line providing potential support.
Fibonacci – Important support at 1.2700 is reinforced by a significant Fibonnaci level.

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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.