10/09/08 8:38 am - EURUSD: Testing lower channel trend line

Resistance at 1.3746 was broken in early Europe but price stalled at the upper channel line and quickly fell back and is testing the lower channel boundary at this point. The rising hourly RSI trend line and the lower channel trend line on the hourlies are expected to provide good near term support at 1.3615. I’m expecting a bounce out of current levels and a move to the upper channel trend line and daily EMA10, around 1.3820. Once the pair has broken out of its channel, further upside towards 1.39 and 1.3980 is likely.

Alternatively, if the lower channel line is broken, we are likely see a return to support at 1.3540, and possibly 1.3442.

Staying long since there is good potential for a rebound at this point. Nearly oversold hourlies should limit the downside on a potential break of the lower channel line (now at 1.3615). But if a clear break occurs, will exit the trade on the next bounce. The daily up trend is still fresh, and there is a possibility that the longer term down trend reasserts itself.

Support: 1.3578 HSppt    1.3442 L-10-6    1.3360 L-8-16-07

Resistance: 1.3700 HSpptRsst    1.3746 L-10-2, Fibo21    1.3986 Fibo38

RSI: Hrly: supported by rising TL, Dly: failure swing, rising

Hourly Chart:

October 9, 2008 · Filed under EUR/USD

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