The EUR USD in my opinion is now established in a new minor uptrend. It appears that the US Dollar Index has topped out having made a marginal new high only to fail and come back under a support area. Indeed the weekly chart of the US Dollar looks quite bearish going forward.
So now we see in somewhat similar fashion the EUR USD having made what looks like a large double bottom with the first bottom area November 2008 and now the second bottom coming in the late February 2009 March 2009 time frame. This looks like a valid double bottom to me with a good amount of space between the retesting action and each retesting action showing good amount of price work and consolidation.
So we have the EUR USD now attempting to succeed off of this double bottom and establish a new uptrend. In the above chart we do see the long significant down trend line on the EUR USD which has a first touch in the July 2008 time period. Then the second touch was on the December 2008 period. This long green down trend line represents a long area of significant resistance and challenge for the EUR USD at this time.
I do expect that we should see the EUR USD attempt to once again test this down trend line and the behavior at that level will be KEY in determining if the EUR USD will continue longer sideways consolidation or begin the start of a much larger longer uptrend. The challenge area comes in roughly at the 1.3400 level. Also drawn in the EUR USD chart is a smaller blue uptrend line for near term uptrend support. Need to maintain this blue uptrend in the near term to allow for the shorter term uptrend to resolve into the downtrend line.
Long term support is seen at 1.25000 and near term support is seen at 1.2990
If I had to guess right now I would guess that the long down trend line will be able to hold price down again and push the EUR USD into a longer consolidation. But that is just a guess! For now we focus on the near term and upcoming challenges in the EUR USD.
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