(Price on 1st pane, Slow Stochastics on 2nd pane; uptrend line in green; downtrend line in red; horizontal support/resistance levels in yellow; 50-period simple moving average in light blue.)

10/24/2008 – EUR/USD – Massively bearish price action on several major pairs as of Friday (10/24/2008) did not spare the EUR/USD (a daily chart of which is shown). Price reached all the way down to approach a key support target in the 1.2450 region (marked “A”) before retreating back up for the weekend, missing the medium-term target by a margin of only around 45 pips.

This plummet that just occurred is yet another leg in the pair’s overall nosedive that hit its stride just about a month ago. Next week, if price action still carries enough downward momentum to re-approach and perhaps breakdown below the 1.2450 level, the pair could collapse even further and reach new long-term lows. More likely, however, traders could potentially be seeing some consolidation/correction above support as a sort of respite after this past week of strong bearish directional moves.

Key support continues to reside in the 1.2450 region, while resistance to the upside resides in the 1.3050 region (marked “B”).

James Chen

Chief Technical Analyst, FX Solutions

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