Chart of the Day - 12/22/2009 – EUR/USD

12/22/2009 – EUR/USD – Price action on EUR/USD, a 4-hour chart of which is shown, has consolidated once again within the context of a strong downside move. After the uptrend breakdown that occurred in the beginning of the month, this currency pair has been characterized by repeated consolidations and then breakdowns of those consolidations. The bearish bias in the pair continues to dominate as price continues to make lower highs and lower lows. Currently, price has just made a new 3-month low, with further bearishness likely. A strong breakdown and close below the 1.4250 price region should confirm a downtrend continuation out of the current descending triangle consolidation. In the event of this strong breakdown, a key further support target to the downside resides around the 1.4050 price region. Any breakout above the triangle, conversely, should meet strong resistance in the 1.4500 price region, which represents the bottom of the prior consolidation.

James Chen, CMT
Chief Technical Strategist
FX Solutions

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(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; chart patterns in white; 50-period simple moving average in light blue.)