FOREX: Main Direction for this EUR/USD should be DOWN

NOTE: When I wrote my commentary for last weeks’ column, I was unknowingly using a chart with a glitch. The chart showed a recent high of 1.4929 for December 17th. The correct high for that day was, in fact, 1.4719, as see seen on today’s corrected chart.

Fortunately, despite the wrong chart data, my commentary was correct when I wrote “there is potential for the market to rise, but that rise should not take out ….1.4429.” I further wrote, “More likely the rally will halt not higher than 1.4290, but possibly not higher than 1.4120”.

At time of writing today, the market has only slightly exceeded the 1.4120 figure, with a weekly high of 1.4150 on December 30th.

For this week, following the international New Year, the main direction for this currency pair should be down. Any move to the upside will encounter resistance between 1.4260 and 1.4370. The high at 1.4719 should be well out of reach of market activity this week.

On the downside, minor support is seen at 1.3700-1.3600. More support is located around 1.3260. Key support is at 1.3080 – meaning that penetration of that level will indicate the down trend has resumed – an unlikely scenario at this time.


EUR/USD chart as at 31 December 2008 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS
R1 – resistance at 1.4260-1.4370
R2 – more distant resistance at 1.4719
S1 – nearby support between 1.3700-1.3600.
Key support – 1.3080.

Stochastic – dropping – around its’ 50 level.
MACD – turning down from it’s overbought level.
200MA – slight downward direction.

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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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