Forex Analysis: EUR/USD Hits New 4-Month Low then Rebounds

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2013-04-04-EURUSD

EUR/USD (daily chart) as of April 4, 2013 has hit a new 4-month low at 1.2744, dropping slightly below its prior low of 1.2750 that was hit just last week. After that low was hit, price rebounded on an intraday basis back up to the tentative 1.2880-area resistance thus far. The new low hinted at a potential continuation of the entrenched bearish trend that has been in place since the early February high around the 1.3700 handle. The medium-term downtrend has seen little in the way of significant upside corrections, as the euro has continued to be weighed down substantially for the past two months.

Having reached its downside target of 1.2800 last week, and then consolidating around this target level since then, in the event of continued bearish pressure after the rebound, price could move towards further downside objectives around the 1.2650 and then 1.2450 support zones. Major upside resistance continues to reside around the key 1.3000 level.

James Chen, CMT
Chief Technical Strategist
City Index Group

Forex trading involves a substantial risk of loss and is not suitable for all investors. This information is being provided only for general market commentary and does not constitute investment trading advice. These materials are not intended as an offer or solicitation with respect to the purchase or sale of any financial instrument and should not be used as the basis for any investment decision.

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About Author

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.