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2013-05-13-EURUSD

May 13, 2013 – EUR/USD (daily chart) has stalled its decline just under the key 1.3000 support/resistance level, which also currently happens to reside around the important 200-day moving average. The current decline occurs after a bullish correction that brought price up in the beginning of the month to hit the 50% Fibonacci retracement level (around 1.3240) of the prior bearish trend from the 1.3700-area high in early February to the 1.2750-area low in late March and early April. The subsequent decline from the 50% level formed a rough head-and-shoulders reversal pattern that broke down late last week to arrive at its current position below 1.3000 support.

Having reached down to the 200-day moving average in the process, price is at a critical juncture. Further declines below 1.3000 and the moving average should target a re-test of the support lows around 1.2750-1.2800, with a further major downside objective around the 1.2650 level, to potentially continue the entrenched downtrend.

James Chen, CMT
Chief Technical Strategist
City Index Group

 

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