EUR/USD (daily chart) has furthered its decline that has been entrenched since the middle of October, and has established a new 2-month low. This bearish trend has broken down below several important technical levels, including the key 1.3000 psychological level, a bullish support trend line extending from the July 1.2040 2-year low, the 200-day moving average, and the 1.2800 prior support level. This short-term downtrend also conforms to the long-term bearish trend that has been in place since the May 2011 1.4935 high. The current bearishness can be seen as a potential end to the July-October upside correction, and a possible resumption of the entrenched long-term downtrend. With potential upside resistance residing around the 1.2800 prior support level, price is approaching the key 1.2600 level to the downside. In the event of a breakdown below 1.2600, the next major support objective potentially resides around the important 1.2300 level.
James Chen, CMT
Chief Technical Strategist
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