FOREX: EURODOLLAR HAS UPSIDE PRESSURE AGAINST US DOLLAR

Last week’s first level of support (S1 at 1.300) is now this week’s first level of resistance (R1). This level has, at least temporarily, halted the attempted rally.

The indicators I’ve applied to the chart indicate there is some upside pressure. If that is the case then there’s a reasonable probability that resistance at R2 could be tested this week.

At the moment the market is in a trading range between S1 and R2. There is a minor two week old down sloping trend line – a break of this and of R1 will target the R2 zone of resistance between 1.3180 and 1.3510.

We can’t count the downside out of the picture just yet, especially if the R2 level at 1.3410 is not exceeded to the upside.


Daily EURO/USD chart as at 5 February 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS

NextView RSI – there is a degree of bullish divergence between the RSI and the chart, exerting some upward pressure.
Stochastic – rising above it’s oversold level.
R1 – 1.3000
R2 – a resistance zone between 1.3180 – 1.3410
R3 – 1.3696
S1 – a break below this level would first target 1.2600 and then the November 20th low of 1.2422, which seems to be out of range for the very near future.

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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.