July 11, 2013 – EUR/USD (daily chart) has pulled back to hit a low around key 1.3000 support today after yesterday’s dramatic surge that shot price up from a low below 1.2800 support up to a high near 1.3200. That surge temporarily helped EUR/USD recover back up to around the 62% Fibonacci retracement of the strong bearish leg that had been in place for the prior three weeks. The current pullback after that recovery represents an exhaustion of the sharp upside move.
Two key support/resistance levels should dictate which direction price may follow after the spike. To the downside, a re-break below 1.3000 would indicate that yesterday’s surge was little more than a bullish retracement within a larger bearish trend. In this case, the currency pair has downside support objectives around 1.2800, 1.2650, and then 1.2450. In the opposite event of a breakout above the 1.3200-area high, a new bullish leg will have formed, with a key upside resistance objective around 1.3400.
James Chen, CMT
Chief Technical Strategist
City Index Group
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