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EURUSD: Following a price collapse wiping out almost all of its two-week gains and a break below its medium term rising channel the past week, further corrective weakness is expected to push the pair further lower.

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Despite its attempt at repairing a part of that technical damage in early trading today, corrective risk still points to the downside with its bearish engulfing candle pattern on the weekly chart (top reversal signal) supporting this view.

Our minimum downside target stands at its April 18’2011 low at 1.4156 with a break and hold below that level aiming at the 1.4061 level, its April 01’2011 low and then the 1.4020/00 levels, its mar 28’2011 low/psycho level. Its daily and weekly momentum indicators are bearish and pointing suggesting further weakness.

On the other hand, the pair will have to return into its broken channel and then climb back above the 1.49.38 level, its 2011 high to reverse its present downside pressure. This will trigger the resumption of its long term uptrend towards the 1.5140 level, its 2009 high and possibly higher.