TECHNICAL ANALYSIS EURO/DOLLAR
Euro/dol lar was f irst traded in Januar y 1999, at around 1.1800-1.1900 and fel l to a hi storical low at 0.8231 on October 26th, 2000. From that bottom, the euro began accumulating and – s ince summer 2002 – moving upwards , entering progress ively a major up-trend and reaching a top at 1.6038 on July 15th, 2008 (+95% vs . the hi storical low). The fal l below the strong suppor t at 1.5275 on August 8th, 2008 ( level that had suppor ted the pair in the period Apri l- July) caused a major reversal , wi th a strong decl ine and a new bottom at 1.2330 at the end of October, 2008 (during the worsening of the f inancial cri s i s). Since March 2009 the euro tried to recover and reached a peak at 1.5145 at the end of
November 2009. From that level the pair star ted to decl ine again, wi th a sel l-of f at the break of 1.3000 and a new low at 1.1875, on the level s of beginning 2006. The last weeks’ bounce brought the pair back at 1.2300. As long as the pair stays below the key res i stance in the 1.2800-1.3000 area , the technical picture remains ver y weak, wi th the poss ibi l i ty of seeing new lows . A val id suppor t i s located in the 1.1640.1.1800 area : a break below there would trigger a new sel l- s ignal , and the pair could fal l to 1.1100, then 1.0765 and eventual ly col lapse to the psychological suppor t at 1.0000. For the coming months , the up-trend would resume only above 1.3500 (unl ikely).
FX
TREND
Trend 3-6 months Trend 6-12 months Trend 12-18 months
down
udown down
S1 S2 S3
SUPPORTS 1.1875+
1.1640-1.1800++ 1.1100
1.2315
SPOT PRICE
R3 R2 R1
RESISTANCES 1.3500++
1.2800-1.3000+ 1.2570
FX TRADER MAGAZINE July - September 2010 57
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