EUR/USD (daily chart) as of February 21, 2013 has broken down substantially below a confluence of several important support factors. These include: the key 1.3300 support/resistance level; the 38.2% Fibonacci retracement of the last major bullish run; the 50-day simple moving average; and the “neckline” of a well-formed head-and-shoulders pattern. Price has also dropped even further to breakdown tentatively below an uptrend support line extending back to the July 2012 1.2041 low.
This marked bearishness within the last two days has brought price down around the 50% Fibonacci retracement level, just below the 1.3200 figure. Having broken down so strongly and forming a potential trend reversal pattern in the head-and-shoulders formation, the trend bias has potentially made a critical shift to the downside with an initial price objective now residing around the key 1.3000 support level. Tentative upside resistance after the breakdown now resides around 1.3300 prior support.
James Chen, CMT
Chief Technical Strategist
City Index Group
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