euro vs dolllar daily chart

EUR/USD - daily candle chart 16th November 2010

With the deep shooting star candle of two weeks ago having been firmly validated in last week’s trading session, and the euro vs dollar ending with a wide spread down candle on the weekly chart, negative sentiment for the euro continued once again yesterday with the fundamental picture and concerns over sovereign debt in Ireland, Greece and Portugal continuing to weigh heavily. Yesterday’s trading session on the daily chart ended with a wide spread down candle, breaking below the 1.3600 price point and closing the day at 1.3573, well below all three short term moving averages once again. Indeed with the 9 day average having now crossed below the 40 day moving average this is adding further to the negative picture at present, and should the 14 day moving average follow suit today or tomorrow, then this will add a further bear cross signal to the chart.

With the short term picture now heavily bearish, the question now is whether this is likely to continue for the longer term, or whether this is simply a market correction following the recent bullish trend, and from a technical perspective there are two areas of potential support. The first of these is the price consolidation in the 1.3250 area, and the second is the 2o0 day moving average which currently sits at 1.3135 on the daily chart, either of which could provide the requisite platform for a bounce and recovery from the recent slide lower. In the next few days however, with little in the way of support below, and with the pair now having crossed below all three short term moving averages, we can expect to see a further decline for the euro vs dollar, until the broader fundamental issues concerning EU member states is resolved, and market concerns are calmed.