Chart Of The Day: EUR/USD

11/17/2008 - EUR/USD - Price action for the last three weeks on the EUR/USD daily chart, as shown, has hit a major sideways consolidation that has manifested itself in a large symmetrical/descending triangle formation (as depicted on the chart by the converging magenta lines). This triangle consolidation has formed around the two-year lows in the pair. Prior to the triangle, there was an extreme downtrend in place, so any strong break below the bottom border of the triangle should validate the consolidation as a continuation pattern. In this event, traders could see price potentially revisit and possibly break below strong support at the 2 ½ year low (around 1.2330) reached just about three weeks ago. Currently, price has rebounded somewhat from the bottom border of the triangle to approach the top border once again. Any major break above this top border could target strong resistance around the 1.3300 region, a significant prior price level that coincides with a major 38.2% Fibonacci retracement level.

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.)