Euro Dollar Daily FX Chart - 21st May 2009

Euro Dollar Daily FX Chart - 21st May 2009

Yesterday’s candle was significant for several reasons and ended the day as a wide spread up bar with the low of the day bouncing off the 9 day moving average and the high of the day closing 1.3750, adding considerable momentum to the reversal seen in the earlier part of the week.  The most significant aspect was the break above the 1.3750 region which has now cleared the resistance built in mid March and now clears the way for a move to breach the 1.40 price point with a probable move in the medium term to 1.42 or even higher.  The importance of this breakout cannot be under-estimated and with a series of good fundamental news announcements and a weakening US dollar as evidenced in the dollar index, there is only one that the euro dollar is going and that is due north.  The only question is how far it will go and my initial price target is 1.42 and if this is breached we could even see a move back to re-test the highs of 1.45, last seen in December 2008.  My trading suggestion for today and until further notice is to open long positions on an any intra day reversals and look to build on these as the upward trend develops and with stop losses somewhere in the 1.32 region.

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