10/28/08 12:39 am - EURUSD: Is the panic rally of the Dollar finally over?

We are finally seeing some definite bottom patterns appear on the EURUSD charts. Whether this is it or not, sooner or later fundamentals HAVE to assert themselves again, and the recent panic rally of the USD is simply unsustainable.

The daily chart of this pair is now showing good fibo symmetry with the 38.2% and 61.8% lines falling into strong technical support/resistance zones. The daily RSI trendline is still holding, and we have a confirmed triple divergence. A double bottom has formed on the hourlies, and more importantly, we are now seeing quadruple RSI divergence, and a yet unbroken rising RSI trendline. Volatility has been high over the last 3 days, with three 250 point up AND down swings just over the last 3 trading days. A break above 1.2585 and then the declining upper channel trend line on the hourlies will confirm the new uptrend. We will likely see some consolidation before 1.2585 is broken, with 1.25 and 1.24 providing support.

Alternatively we could see a break of 1.2328 and further downside.

Action Plan: My previous long position developed as planned initially, and I raised my stop. Failed to take profit near 1.30 and got stopped out at entry level. Now going long at 1.2526, stop below 1.2328 low at 1.2288.

Support: 1.25 L-10-24    1.2400 HSpptRsst    1.2328 L-10-27

Resistance: 1.2585 H-10-27    1.2730 L-10-22    1.3000 H-10-23

RSI: Dly: 3x div, supported by rising TL, Hrly: 4x div, supported by rising TL

Hourly Chart:

Daily Chart: