Technical Trading Tips and Techniques by 
Price action on EUR/USD, a daily chart of which is shown, has made a significant bullish correction during the latter half of this week to hit the week’s high at 1.2670 (as of Friday morning, 5/21/2010, New York session). This occurs within the context of a strong overall downtrend in the pair, and after price hit a 4+ year low at 1.2142 in the middle of the week. Despite the current bullish correction, the technical outlook on EUR/USD continues to be bearish in line with the strong overall downtrend. For more technical analysis on this currency pair, please click here for Friday’s (5/21/2010) Chart of the Day.
James Chen, CTA, CMT
* For information on my DVD set, High-Probability Trend Following in the Forex Market, please click here.
* For information on my book, Essentials of Foreign Exchange Trading (Wiley), please click here.
* For information on my new book, Essentials of Technical Analysis for Financial Markets (Wiley), please click here.
One of the more difficult pairs to trade, the EUR/USD has now become even more difficult. During this week it became clear that in the meeting 15 days ago, the G7 central banks have agreed to protect the euro by intervening when necessary. After having seen suspicious movements of 200-300 pips just based on rumors, the downward trend of the euro may have changed. In my opinion the previous strategy of letting up and put short trades no longer apply at this point, now it is best to let down and then put long trades. It is also necessary to stress that technical analysis may not apply to this pair, the news seems to be the most significant factor for such volatility, however the resistance and support levels have helped a lot. It’s just one more opinion about this pair.
Sorry for the late reply. Thanks, Jorge! Your analysis is always welcomed!
James Chen