(Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; horizontal support/resistance lines in yellow; 200-period simple moving average in light blue.)

8/05/2008 – EUR/USD – Price action on the EUR/USD daily chart, as shown, has finally made a significant breakdown of the long-term uptrend support line (represented by the green line labeled “A”). In doing so, price has hit a significant support/resistance level around the 1.5460 level.

Any further downward momentum on this break should target the first support to the downside around the 1.5360 region. A bit further down, there is a major support area at the very bottom of the current horizontal trading range (labeled “B”), around the 1.5280-1.5300 region.

Oscillators like the displayed Stochastics are in prolonged oversold conditions at this point, but price may still have more room to drop. Resistance to the upside on a rebound, on the other hand, should now reside around the green uptrend line that the pair just broke down today.

James Chen

Chief Technical Analyst, FX Solutions

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