FOREX: EUR/USD DOWN TREND SHOULD CONTINUE IF GOES BELOW 1.2650

Last week I stated that the long term trend of the market is still down, as long as there is no close above 1.2800.

Well, there was a one day close above 1.2800, but the market did not interpret that as a preclude to a change in trend, and the market turned down again.

Currently, I’m inclined to interpret the price pattern that began on February 2nd to the present, as corrective action against the down trend, with an implied downward target that should exceed the low of February 18/09, of 1.2512, and proceed down to at least 1.2400 in the near future. This continuing down move should be confirmed by a close below 1.2650.

A secondary scenario which could occur if there is a market close above 1.2900, is that corrective action could rise to around 1.3200. At the moment this secondary scenario, while it is plausible, seems less likely.


Daily EUR/USD chart as at 26 February 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS

Moving Averages – long term moving averages such as the 200SMA (not shown on the chart, but currently at 1.3828), and short term moving averages such as EMA20, are still sloping down wards.

Oscillators – both the MACD and Stochastic are rising. The NextView RSI is down slightly.

R1 – nearby resistance at 1.2991
R2 – 1.3200
S1 – 1.2650
S2 – 1.2500
S3 – 1.2400

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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.

Come and visit Don Schellenberg at ATIC Kuala Lumpur on the 14th and 15th of March 2009