Chart of the Day - 10/05/2010 – EUR/USD

[James Chen]

10/05/2010 – EUR/USD – Price action on EUR/USD (a 4-hour chart of which is shown) as of Tuesday (10/05/2010) has continued its dramatic recent bullishness by breaking out above prior key resistance in the 1.3800 price region, establishing an 8-month high in the process. This occurs within an exceptionally steep, continuing uptrend channel extending from mid-September. The current high also occurs after Monday’s (10/04/2010) substantial bearish retracement brought price back down to the bottom of the uptrend channel. Now that a breakout above that counter-trend retracement and above the important 1.3800 level has occurred, the key upside resistance target continues to reside in the 1.4000 price region, a prior support/resistance level as well as a key psychological number. Dynamic downside support continues to reside around the bottom of the current uptrend channel.

James Chen, CMT
Chief Technical Strategist
FX Solutions

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(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; chart patterns in white; 50-period simple moving average in light blue.)