Forex Analysis: EUR/USD Stalls within Strong Bearish Trend

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2014-08-14-EURUSD

August 14, 2014 – EUR/USD (daily chart) has tentatively stalled within a new bearish trend that has steadfastly asserted itself within the past three months. The current consolidation occurs near the year-to-date low of 1.3332, hit just last week, which established a new 9-month low for the currency pair.

Since the beginning of July, the currency pair has made a virtually uninterrupted free fall from 1.3700-area resistance, extending the broader decline from May’s 1.3993 multi-year high.

The breakdown below 1.3500 in late July provided a pivotal indicator of EUR/USD’s continued bearish momentum. The pair has continued its decline by dropping below the 50% Fibonacci retracement level of the previous bullish trend from the July 2013 low around 1.2750 up to the noted May 1.3993 multi-year high.

Despite the current consolidation, EUR/USD continues to maintain a strong bearish bias. The 50-day moving average crossed sharply below the 200-day average in late June and has continued to slope sharply downward.

With major upside resistance on any rebound still residing at the 1.3500 level, the currency pair is targeting its next major downside objective around the 1.3300 support level, last hit in November of 2013, followed by the 1.3100 level, last hit in September 2013.

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.

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