August 14, 2014 – EUR/USD (daily chart) has tentatively stalled within a new bearish trend that has steadfastly asserted itself within the past three months. The current consolidation occurs near the year-to-date low of 1.3332, hit just last week, which established a new 9-month low for the currency pair.
Since the beginning of July, the currency pair has made a virtually uninterrupted free fall from 1.3700-area resistance, extending the broader decline from May’s 1.3993 multi-year high.
The breakdown below 1.3500 in late July provided a pivotal indicator of EUR/USD’s continued bearish momentum. The pair has continued its decline by dropping below the 50% Fibonacci retracement level of the previous bullish trend from the July 2013 low around 1.2750 up to the noted May 1.3993 multi-year high.
Despite the current consolidation, EUR/USD continues to maintain a strong bearish bias. The 50-day moving average crossed sharply below the 200-day average in late June and has continued to slope sharply downward.
With major upside resistance on any rebound still residing at the 1.3500 level, the currency pair is targeting its next major downside objective around the 1.3300 support level, last hit in November of 2013, followed by the 1.3100 level, last hit in September 2013.
James Chen, CMT
Chief Technical Strategist
City Index Group
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