Euro/US Dollar Analysis

On September 22/09, this currency pair finally stretched up to a visible level of resistance (R1 on the chart). This level is confirmed by at least two important Fibonacci ratios – one obtained by the Fibonacci retracement tool, and one by the projection tool.

These facts, of themselves, won’t prevent a further rise in Euro’s value. But there are signs that a significant downward correction will be due soon.

1) Since early June/09, the gradual up-move for EURUSD has largely been without correction and there have only been brief periods of trend.

2) Momentum and trend indicators began to turn down when the market reached the resistance level (R1) that has been on my watchlist for months.


Daily Eur/Usd chart as at 29 Sep 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS
Stochastics – oversold
MACD - below its “0” line, and strongly down.
ADX – around its 24 level, reflecting the strength of the down trend.
SMA200 – rising at 1.5585
EMA20- down, at 1.6200
R1 – nearby resistance at 1.6467
R2 – 1.67522
S1 – 1.5769
S2 – zone of support from 1.5500-1.5400.

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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.