Technical Trading Tips and Techniques by 
Bearish price action on EUR/USD (a daily chart of which is shown) as of early Wednesday (4/8/2009) morning has broken cleanly below the support provided by both the key 1.3300 horizontal support/resistance level as well as a short-term uptrend support line extending from the low on 3/4/2009. This breakdown, with any continued bearish momentum, could easily reach immediate downside support around the 1.3100 price region, an important support/resistance area. This bearishness occurs after price respected the long-term downtrend resistance line extending from the second test of the 1.6 all-time high in July. As of Wednesday morning, the pair has made a minor bullish correction of some of the bearishness seen since the beginning of the week. But with the strong support breakdown, bearishness should continue from a technical perspective. To the downside, as mentioned, further key support resides around the 1.3100 region, and then immediately below in the 1.3000 region. Any break below this latter key level would indicate substantial bearishness in the pair that could go on to test further lows. To the upside, the 1.3300 should now serve as some resistance, with the mentioned long-term downtrend resistance line providing further major resistance to the upside.
UPDATE: As of Wednesday (4/08/2009) mid-session in New York, price on this pair has risen to retest the 1.3300 resistance, and is currently stalled right around this level. If 1.3300 fails to hold on the daily bar close, the long-term downtrend resistance line mentioned above should serve as further resistance to the upside. Downside support levels in the event of a resumption of the prior bearishness continue to apply.
Hello Again Mr. Chen,
I have two questions: Do you believe we should sell into the rallies on the EURO/USD? Also, you think the USD Minutes of FOMC Meeting is going to give us some good price action? At this time the EURO is @ 1.3280 and rising. I still believe selling into this would be best. What are your thoughts?
Hi Mark,
Great question. Price continues to test resistance. I’m looking at the 1.3300 level as a gauge of near-term direction. This is a key level, and yes, I believe FOMC minutes will provide some further direction on this. Thanks, Mark.
James Chen
Selling into the upward move the EURO/USD did is paying off. I got my stop @ 1.3310 and proceeding with caution. You know how the market gets before a Holiday.
Great to hear that your strategy is working out for on this one. For the time being at least, it seems like the 1.33 resistance has held thus far. And yes, the market can certainly be seen as acting pre-holiday right now. Thanks for visiting, Mark!
James Chen