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Finding new support levels on the EUR/USD |
| | | The descending resistance level on the EUR/USD has been very consistent for the last month or so, while support has remained fairly horizontal over the same time period.
(For more technical analysis, charts and analysis, click on the pair flags below)
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The descending triangle formed by these support and resistance levels was nearing convergence in the consolidation zone last week, and we were watching for the breakout.
Editor's Note: If you aren't familiar with these principles be sure to read Charting with Support and Resistance or Technical Patterns to learn more.
The break from the consolidation zone came a bit earlier than expected, as Friday the pair pushed dramatically through resistance, and now looks to establish a new trend and new support and resistance levels.
Analysis continues below...
So where do we think those levels of S&R will be now? Well, if we take a look back a couple months to mid-January, we see the EUR/USD was in a similar position. The pair was in a downward trend, and when it hit around the 1.30 level, it began to consolidate before ultimately trending down to a new low, and new resistance level, at 1.25.
So here we are, seeing a break from the descending triangle, and looking at the 1.30 level again. It's not unlikely that we'll see similar movement this go round on the pair. Consolidation is likely, now that we've established the 1.30 level as a key fibonacci level, and a break below that level leaves possible new support at 1.25 again.
Next: Support and Resistance Levels.
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