EUR/USD Technical Analysis March 30

Wednesday, 30 March 2011 19:34

The last two weeks of March have seen the development of a new down trend in the euro. The pair failed to retrace back to the 1.4248 high and is now consolidating. A new pattern emerges which could trigger a trading opportunity.

Observations:

1- The EUR/USD is confined between two support/resistance levels (R1: 1.4545, S1: 1.4050).

2- A strong support trend line (T1) has been developing since the start of the week.

3- Despite breaking above T2, the EUR/USD met heavy resistance at R1.

The topside failure suggests a possible continuation of the long term down trend and the formation of new lows.

A breach through T1, and then the first support level S1, could send the EUR/USD down to Monday’s low (1.4020), and then 1.3980. Moreover, a break through the psychological level 1.4000 would add momentum to the down move.

The strong support trend line T1 seems likely to be tested again in the short term before the pair finds a new direction. Hence, any upside move is to be handled with precaution.