EUR/USD Continuation and Resistance Levels to Watch

The intraday EUR/USD has broken the 1.3300 level, making a new 11-month low at 1.3259. (The last time prices traded at these levels: May 1, 2009.) The downtrend has formed a Falling Wedge pattern, with prices continuing to press down and make not only lower lows, but lower highs as well; these lower highs are the resistance that is currently keeping selling pressure on the EUR/USD. Prices are testing the Wedge’s resistance at 1.3290, just below the 1.3300 “big figure” level. If selling pressure holds here, look for the downtrend to resume.

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The flat Initial Trend reading – just one bar – signals that the downtrend may be losing selling momentum, or at the very least stalling just below 1.3300. This could either be a retest and reconfirmation of resistance at this level (which would be very bearish), or it could be a near-term trend reversal at 1.3299 (see the green downtrend line). If the latter is the case, the second and third resistance levels would then be waiting at 1.3320 and 1.3350 (R), respectively. However, until prices can stage a reversal by breaking higher through the downtrend line resistance, look for a continuation lower, assuming that the one-bar Initial Trend reading simply reflects a stall as traders await the opening of the Asian session, when trading participation will pick back up.

Charts courtesy of Autochartist

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