04/22/09 8:22 am - EURUSD: Breakdown expected

Last night’s break out to the downside was followed by a sharp rally, likely fueled by a lot of short covering. The rally stalled at 1.3032 and an RSI of 70, just the levels I had expected yesterday. I believe we will see the downtrend resume from here on, with new lows being made within a few hours. Of concern is that the RSI is in a rising channel and looks a bit bullish, but currently at the upper boundary of this channel, and we should see a downturn from here.

My short entry order at 1.2980 was triggered this morning, and the trade is still slightly underwater. Stop is at 1.3095, beyond the 38.2% Fibo, and the target is 1.2835.

Support: 1.2884 HSppt   1.2840 DFibo21   1.2730 DFibo21

Resistance: 1.3032 HRsst  1.3060 HSpptRsst   1.3080 Fibo38

RSI: Hrly: bounced off , Dly: bearish, broke below rising TL, room for more downside

Hourly Chart:

April 22, 2009 · Filed under EUR/USD

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