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The upmove to 1.3625 yesterday was short lived and price quickly collapsed to 1.3450 and couldn’t really recover from that drop since then. 1.3530 was tested this morning, but met with strong selling interest, pushing the pair back below 1.3500. RSI has the shape of an unsustainable corrective rebound, and I expect it to turn down. The dailies look bearish again and on track for new lows.

I went short this morning at 1.3503, stop at 1.3560, and target 1.3260. Price may find support around 1.33, former resistance in January last year. 1.3250 is declining channel trend line support on the daily chart.

Support: 1.3444 HSppt   1.3425 SpptRsst May-09   1.3300 SpptRsst 01-09

Resistance: 1.3537 HSpptRsst   1.3585 HSpptRsst   1.3653 HSpptRsst

RSI: Hrly: mildly bullish but near resistance, Dly: near decl. TL resistance and turning down again

Hourly Chart:

The Euro has recovered slightly after finding support near 1.35oo yesterday. The slope and shape of the upmove suggests that this is a corrective leg, which should be followed by another downleg. But price has consolidated above the hourly EMA10 quite a bit, leaving the potential for this to be the beginning of the sharp upmove I talked about yesterday. But for now the downside should be favored, since the long term trend is still clearly bearish. I’m looking for a short entry opportunity instead of chasing a corrective rally.

Support: 1.3485 HSppt   1.3444 HSppt   1.3425 SpptRsst May-09

Resistance: 1.3530 HSpptRsst   1.3585 HSpptRsst   1.3653 HSpptRsst

RSI: Hrly: bullish and supported by rising TL, Dly: bouncing from o/s, near decl. TL resistance

Hourly Chart:

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The failure to sustain the break above 1.3665 was followed by a sharp drop which stalled at 1.3530. The pair could not find lasting support at this level, which was also the bottom of a rising channel on the hourlies, and price support on the dailies. Hourly RSI is bearish and broke below a rising trendline, but we are near oversold territory.

I expected a rebound from 1.3530 and reset my long at 1.3575, jumping the gun a bit in retrospect since price retested 1.3530 once again after that and broke below it. My stop was set at 1.3515 and just hit, for a 60 point loss. The break below 1.3530 calls for a move to 1.3485…44, and could easily lead to new lows. I’m not going short though since dailies are still losing downward momentum, and we could see a sharp upswing towards 1.3780 any time without much warning.

Support: 1.3485 HSppt   1.3444 HSppt   1.3425 SpptRsst May-09

Resistance: 1.3530 HSpptRsst   1.3585 HSpptRsst   1.3653 HSpptRsst

RSI: Hrly: bearish but near o/s, broke below rising TL, Dly: bouncing from o/s, near decl. TL resistance

Hourly Chart:

Closed my long for a 98 point profit at 1.3624. Consolidation doesn’t look bullish enough to me, and it’s a nice profit I choose to protect. Not being able to watch the trade overnight is another factor. A return to 1.3530 cannot be ruled out, hourly RSI and price development looks slightly bearish.

Hourly Chart: