Monday January 5, 2009 - 16:41:01 GMT
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Chart of the Day - 1/05/2009 - EUR/USD
(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; downtrend line in red; horizontal support/resistance lines in yellow; Fibonacci retracements in grey; chart pattern in magenta; 50-period simple moving average in light blue.)
1/05/2009 â€“ EUR/USD â€“ On the first day of the first full week of 2009, price action on the EUR/USD pair, a daily chart of which is shown, has made a bold statement regarding the remarkably rapid uptrend that was in place during the month of December. It is indicating that the uptrend could very well have been merely a substantial, but normal, upside retracement within the context of a potentially continuing downtrend in the pair. The magnitude of the retracement move within such a short period of time can be attributed to thin seasonal liquidity with a resulting high volatility. Indeed, Decemberâ€™s dramatic bullish run that occurred within the span of only a couple of weeks reached up to a major 61.8% Fibonacci retracement level before finally retreating (the high-to-low retracement span being measured from the all-time high at 1.6037 reached on 7/15/2008 down to the recent 2 Â½ year low hit on 10/28/2008). Mondayâ€™s price action has dropped well below several intermediate support levels, and currently appears to be targeting further support around the 1.3250-1.3300 region. If this indeed occurs, a bearish continuation of the overall downtrend could very well be in the making, although a confirmation of this continuation would only occur on a break below the 1.2300 region, which at this time appears a long way off.
Chief Technical Strategist
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