By Russell Glaser – After consolidating just above the 50% retracement level of the previous uptrend, the EUR/USD has begun to fall back inline with its long term downward trend line. A Forex technical analysis indicates further downward movement in the pair could be possible with a short term target the S3 support level.
The dollar strengthened this morning during the early hours of the European trading session and has left the EUR/USD in a position to make a larger move lower. The price has dropped below the S2 level of 1.3667.
The daily chart shows the long term trend line that began in early December at the height of the previous bullish run. The pair has maintained this trend line after consolidating for the past 3 weeks, arriving at the 50% retracement level. Since then the pair has made a breakout lower.
The 7-day Relative Strength Indicator shows the pair has broken below the 70 level, indicating a sell signal. We can also see the RSI line has breached an upward sloping trend line, providing further evidence of a significant downward move in the price.
Also supporting a price move lower is the downward sloping MACD histogram. This shows the downward move may be gaining momentum for a further run lower.
A target for Forex technical analysis traders may be the S3 support level of 1.3575.
Forex Market Analysis provided by Forex Yard.
© 2006 by FxYard Ltd
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