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EUR/USD - Correction in the Making
Posted on October 14, 2008 at 13:23 in Analysis by James Chen

(Please click on the accompanying chart to enlarge.)

As shown on the accompanying EUR/USD daily chart, price has made a true rebound off its one-year low reached late last week. This constitutes an expected correction after the steep downtrend of the last three weeks. The next logical target for this correction/retracement from a technical perspective would be the 1.3880 region, which represents not only the last major swing low pivot, but also a key 38.2% Fibonacci retracement level. To the downside, the 1.3260 region, which represents the aforementioned one-year low for the pair, should continue to act as support going forward.

UPDATE: As of early Wednesday morning in New York, price action on this pair has consolidated in a horizontal trading range, and the correction has stalled. Relevant support and resistance levels as noted above still apply.

5 Responses to “EUR/USD - Correction in the Making”

  1. on 14 Oct 2008 at 3:00 pm1Ramadass

    As said yesterday,GBP/USD seems strong at 1.7500 look may rise to max 1.8300 in few days pls give your opinin .thanks

  2. on 14 Oct 2008 at 3:09 pm2James Chen

    Hi Ramadass,

    Thanks for your comment. I agree that as of Tuesday morning, this pair appears strong. I have the next major resistance around the 1.7750 region. At this point, 1.8300 is a bit far off. But it could eventually get there. Thanks, Ramadass.

    - James

  3. on 14 Oct 2008 at 6:25 pm3arthur vales

    What is the real trend for euro/dollar?
    Is there a possibility that short term euro will break 1,40

    regards

  4. on 14 Oct 2008 at 7:48 pm4James Chen

    Hi Arthur,

    Thanks for your question. Great question. The real trend for EUR/USD right now really depends on which timeframe you are looking at. On a very long-term basis, we haven’t yet broken a key uptrend support line, so we can potentially be considered as being in a long-term uptrend. On a medium term basis for the last three months, we have been in a marked downtrend. And from a short-term basis we are currently in somewhat of a consolidation with a possible upturn correction in the recent downtrend. Hopefully that helps. Thanks, Arthur.

    - James

  5. on 14 Oct 2008 at 7:49 pm5James Chen

    And Arthur, if upside momentum continues, we could possibly be seeing 1.4000 pretty soon. Thanks, Arthur.

    - James

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