FOREX: EUR/USD PROBABILITY OF MORE DOWNSIDE MOMENTUM

The “Flag” that was less than ideal, as noted in last week’s analysis, never did become ideal, and eventually dropped to the downside very close to key support at 1.3079.

The market is showing some early signs of being over sold on short term indicators. Longer term indicators are showing the probability of more down side momentum.

It is very likely in the next couple of days that there will be an upward bounce from the general area around 1.3079. A nearby target for a bullish bounce is 1.3600, and then 1.3721.

If key support at 1.3079 is penetrated, and especially if 1.3030 is broken to the downside, any upward gains should be minimal, although a rise as high as 1.3950 would not be out of the question.

Support at 1.3079 remains the level to carefully monitor.


Daily EUR/USD chart as at 15 January 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS
R1 – nearby resistance at 1.3500.
R2 – 1.3700
R3 – 1.3960
S1 – key support between 1.3079- 1.3030
S2 – 1.2730 (not shown on today’s chart.

Stochastic – oversold
MACD – strongly down

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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.