The EUR/USD has been in a steep downtrend (chart below) since reaching a near-term high around 1.47. Since that time the pair has tumbled, hitting as low as 1.27, and has remained in a trading range that forms a very tight downward channel.
But looking closely we see a Fibonacci retracement study applied to the pair from the high in July to the low in October gives us some historically very reliable potential support and resistance levels.
Most important to us now is the convergence of our downward trend resistance level and our 23.6% Fibonacci retracement level a couple of days ago (See chart below).
If you're not familiar, be sure to read Forex Technical Analysis to fully understand how chart analysis is vital to foreign currency traders.
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We got a bounce just as we would have expected that confirms our Fib analysis and our downward trending channel support and resistance levels.
As a result, we should expect the EUR/USD to continue moving downward in that channel until it reaches the 0% Fibonacci support line at 1.25, where we will need to watch very closely.
A bounce on that line will tell us to watch and see if it hits resistance on the channel. If it does, we'll watch for a break in support at the 0% Fib line again.
If it breaks through, that likely indicates a continuation of the down-trend, and we wait to establish a new support level for future analysis.
I think analysis you make is making sense, however I think US economic is weak and Europeans are stronger and Euro will find growth.
John Jagerson
- US Falling
|2009-01-29 06:40:21
I assume that you are long the EUR/USD then?
Ryan
- I'm long
|2009-01-29 06:57:36
...but not the EUR/USD!
SkyStriker
- EUR/USD
|2009-01-29 09:25:21
I'm short in short term and long as long term.
I think that the EUR is stronger but the big traders are waiting for the pair to hit its low and bounce fast and strong.
unclefem
- EU.....going south
|2009-02-01 04:19:32
you're a good analyst. In a nut shell, eu is going south cos majority went that way.
RatRace
- stocks must go up first
|2009-02-01 09:16:36
EURUSD will go up when the US stocks go up. If last months figures are not extremely bad, dollars will flow back into the stock market.
sugeng
- eu
|2009-02-05 12:48:47
i hope ue growth .mugo-mugo wae tp ku keno>
pipsurgeon
- EUR/USD is going south
|2009-02-08 05:34:00
Have anybody seen the news lately..If you think the EUR is strong your are living in another planet...Look at the monthly and weekly chart, their is nothing bullish about it... im wainting for a nice rally to the 1.3300 and short it again...
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3.25 Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved."
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