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Forex Analysis: EUR/USD Extends Bearish Retracement

EUR/USD Daily Chart

10/26/2012 – EUR/USD has made a tentative breakdown of an uptrend support line that extends back to the July 1.2040 low. This unconfirmed breach occurs as the 200-day and 100-day moving averages have just touched, preparing for a potential crossover to the upside for the first time since the bearish crossover occurred one year ago. This moving average cross is currently just above the key 1.2800 support region, and serves as potential support for any further bearish correction. The 1.2800 level and the 200-day moving average have in conjunction served as a strong support confluence on two occasions within the last month. To the upside, a bounce off support (supplied by either the trendline, the moving average, or the important 1.2800 level) that moves back above the key 1.3000 psychological level could once again rise towards a resistance retest of the September 1.3170 high, with a longer-term potential upside objective around the 1.3500 price region.

James Chen, CMT
Chief Technical Strategist
FX Solutions

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James Chen

James Chen

James Chen is Chief Technical Strategist for City Index Group. He is also a Chartered Market Technician. He is the author of the books: "Essentials of Foreign Exchange Trading" (John Wiley & Sons, 2009) and "Essentials of Technical Analysis for Financial Markets" (John Wiley & Sons, 2010). Mr. Chen writes currency analysis, leads forex trading seminars and has appeared in numerous major financial media outlets, including CNBC, Bloomberg TV, Forbes, Reuters, Dow Jones, and the Associated Press.