02/08/10 9:43 am - EURUSD: Rebound underway

The pair is starting to rebound and the RSI is bullish and very supportive of this move. Both price and RSI are supported by rising trend lines. I expect resistance at 1.3745 to be tested, and if broken a quick move to 1.3850, near the daily EMA10, may follow.

I’m still sidelined, but feel a bit tempted to join the long side for a short term trade, but not at the current (1.37) level which is near the highs of the hourly range. Would prefer to enter near 1.3665, near the support trend line, and am content to wait for that level, or stay sidelined otherwise. The hourlies are still a bit mixed relative to their EMA10, and caution is advised. We could easily see another breakdown and a retest of 1.3585 support.

My long term plan is to establish another short position, but I have to be careful since we may well see a powerful short covering rally that could take us easily all the way up to 1.45. This would take a few days of course, but would make it difficult to set a short trade with a reasonably tight stop. The potential for such a strong rebound makes the long trade attractive.

Support: 1.3665 HSpptRsst   1.3585 SpptRsst   1.3540 ChannelTLSppt

Resistance: 1.3745 SpptRsst, DFibo38  1.3850 HSpptRsst   1.4025 HSpptRsst

RSI: Hrly: bullish, supported by rising TL, Dly: bearish, capped by decl. TL, o/s

Hourly Chart: