03/03/09 10:14 pm - EURUSD: The Downtrend Continues

Unless the pair can break back into the 1.25’s, the downtrend is likely to continue and 1.2510 should cap any upward move in the short term as longs taken above this key level are trying to get out. Daily and Hourly trends are down, and the hourlies are only marginally oversold and have room to run lower.

However, having said that, the very good low-risk entry opportunity for bulls still exists, and the closer we get to 1.2328 the smaller the reward gets for new bears. It is exactly this setup that often leads to turns just ahead of a key level. In our case, as we get closer to 1.2328, more and more shorts are taking profit and more and more longs are entering.

At this point the only supports left ahead of 1.2328 are 1.2422 and 1.2387, none of those are of high significance. The market is likely to slowly drift down from here unless we get some Euro-bullish news that could swing things the other way. I will only abandon my bearish bias if the hourlies move into the 1.25’s and close above their EMA10, or I see a clear trend line break on the hourly price and RSI chart. Keeping my powder dry for now, not enough reward for a short.

Hourly Chart:

March 3, 2009 · Filed under Uncategorized

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