EUR/USD Breaks Key Trendline Support

by Admin

EUR/USD 4H chart 2/21/20137:15AM EST

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False Breakout: A break above 1.34 turned out to be a false breakout, as the EUR/USD reversed during the 2/20 session below 1.33 support area, and extended lower after the FOMC meeting minutes revealed plans to end QE. Any pullback should be monitored for resistance in the previous support around the 1.33 area.

Rising trendline: The 2/21 Asian and European session poured on the selling as well, and the EUR/USD starts the 2/21 US session below 1.32, and breaking below a rising trendline that goes back to July 2012 where it found support at 1.2041 and rallied to 1.3710 by February 2013. 38.2% retracement of this rally would be 1.3072, which could be the rest of this week’s short-term target. Below that, the 50% retracement is also in sight at 1.2875.

An additional clue now for this bearish outlook would be the RSI in the daily chart falling below 40, which would reflect loss of the bullish momentum.

EUR/USD Daily chart 2/21/2013 7:17AM EST

EURUSD