By: Mike Kulej
Last couple of days brought a little reprieve for the Euro. After falling from 1.4281 to 1.2970, the EUR-USD pair bounced to a high of 1.3246 on Wednesday. However, this rally could be short lived.
From June to early November, this pair had had a strong bullish run, which created the trendline on this daily chart of the EUR-USD. Now this trendline is broken, with the price residing below it. A move like this changes the polarity of the trendline, meaning that here it no longer provides support, but is a possible resistance.
Currently, the EUR-USD is approaching this trendline, and could test it between1.3280-1.3310. The precise level will depend on where this happens. That should demonstrate if the present rally is for real or only a small bounce within the prevailing down trend.
For the moment, the nearest support is at 1.2970, the low from Tuesday. This means that the EUR-USD is contained within a relatively narrow zone of a little 300 pips. Not much for a daily chart. Chances are that a strong move out of this area will happen soon, probably within the next few days. Both the trendline and the support should be watched carefully.
EUR-USD Could Test the Trendline
DailyForex.com