Euro vs Dollar - Daily Forex Chart 20th April 2009

Euro vs Dollar - Daily Forex Chart 20th April 2009

Friday’s wide spread down bar added momentum to the bearish sentiment in the euro vs dollar and closed the day and the week below the 40 day moving average, adding both significance and weight to the candle.  With all three moving averages now pointing lower, and an unusual gapped down open to the start of the forex trading week in Asia, this has added further impetus to the move.  The Japanese refer to such a move as a falling window which adds considerable significance to any move.  The key for this week will be the strength of any support, as we are now running back into the heavy consolidation area which was created in the first quarter of the trading year and sits between the current price point and the double bottom around the 1.2500, so we have a 500 pip consolidation area to negotiate, if prices are to move lower.  Within this region there are a variety of levels, any one of which could temporarily halt or reverse the current trend, making trading somewhat hazardous once again.  Whilst shorting the euro may appear to be a “no brainer” you will need to take great care with both stop loss placement and any analysis of the chart because the markets (currency markets especially) always have a very nasty habit of biting the hand that feeds them.

Euro vs Dollar - Weekly FX Chart EUR/USD Candlestick 20th April 2009

Euro vs Dollar - Weekly FX Chart EUR/USD Candlestick 20th April 2009

The same caveat applies to the weekly chart with the close of Friday marginally above the 9 week and marginally below the 14 week moving averages, and with a long upper shadow which failed to breach the 40 week moving average, once again suggesting weakness in the euro vs dollar pair.  I have included the weekly chart for you which clearly shows the resistance to any move higher bounded by the 40 week moving average and the closely entwined 9 and 14 week moving averages.

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