Chart of The Day - 6/09/2008 – EUR/USD

The EUR/USD 4-hour chart, as shown, is showing some interesting technical indications. On a long-term basis, this key pair is currently mired in a horizontal trading range, or consolidation. On the 4-hour chart, price is shown to have just bounced down off a significant resistance level after an impressive short-term bullish run in the past several days. This bounce back down occurs after hitting the combined resistance imposed by the yellow horizontal support/resistance line (in the 1.5815-45 region) and the underside of the green uptrend line. Oscillators like the displayed Stochastics, which are emerging directly down from severely overbought territory, are lending some strength to a continued short-term bearish move. In the event of this impending move back down, the next major support to the downside resides in the historically significant support/resistance level in the 1.5360 region, which price just reached last Thursday.

James Chen
Chief Technical Analyst
FX Solutions

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(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; downtrend line in red; uptrend line in green; horizontal support/resistance level in yellow; 200-period simple moving average in light blue.)