FOREX: Euro Dollar has strengthened against the US Dollar

At the time of writing, the Euro dollar has strengthened against the US dollar, and may have potential to strengthen more in the near term. However, just today the market rose to a level of relatively strong resistance.

No important previous highs have been exceeded so far in the Euro’s rise, which makes somewhat vulnerable to areas of resistance. The resistance is appearing at 1.2780, very near to the R3 level mentioned in last week’s column.

A combination of forces at 1.287- is what the market is reacting to. Firstly, there is a one month old declining trend line precisely at that level as well as at least five Fibonacci ratios virtually piled on top of each other.

While the bearish reaction at 1.2870 was predictable it’s not yet clear how far the bears can push the market down.

A drop below 1.2700 would likely cause a decline that would test the low at 1.2455. On the other hand, a close above 1.2900 would likely send the market up to between 1.3000-1.3100.



TECHNICALS

MACD – rising strongly
Stochastic – rising strongly
EMA20 – rising slight, and below the current price

R1 – immediate resistance at 1.2870
R2 – zone of resistance between 1.3000-1.3100
S1 – immediate zone of support between 1.2715 – 1.2630
S2 – distant support at 1.2455

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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