Chart Of The Day: EUR/USD

10/09/2008 - EUR/USD - Within the past few days, a tight consolidation on the EUR/USD (a daily chart of which is shown) has formed a rough inverted flag pattern. The flagpole represents the massive drop that has occurred in the pair within the last two weeks. Three subsequent bars after the sustained plummet represent a slightly bullish consolidation/correction that strongly hints at indecision in the market. Watch for any strong, sustained breakout below the lower border of the flag, which would fulfill the flag's common role as a continuation pattern. In this event, strong support to the downside, below the entire flag, resides around the key 1.3350 historical support/resistance region.

James Chen
Chief Technical Analyst

FX Solutions

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(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; downtrend lines in red; horizontal support/resistance lines in yellow; 200-period simple moving average in light blue.)