FOREX: EUR/USD Analysis

On May 20th I wrote in this column as follows: ‘In any case there is a strong possibility that the market will reach to around 1.4170-1.4200 within the next couple of weeks’.

On June 1st EUR/USD reached and exceeded that level and on June 3rd created a five month high of 1.4338.

Market strength has tapered off somewhat. A few days of sideways correction is very probable. The market has reached a level of potentially strong resistance and fallen back slightly from there. If the market drops below the closest rising trend line marked on the chart, a larger correction could ensue.

On the up-side there are other attractive targets such as the resistance zone from 1.4620-1.4660. That area should be watched carefully as it could be a major turning point. However as long as the rising trend line is not penetrated convincingly, upside targets will still be within range.


Daily EUR/USD chart as at 4 June 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS

Stochastic – in over bought level.
MACD - rising, but with weaker momentum
SMA200 – flat around 1.3170.
EMA20 – rising
TL1 – the lower, rising trend line.
TL2 – currently the rising trend line closest to price.

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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.