On the weekly chart, the close was between the 10 (1.4261) and 20 (1.4041) weekly EMA. The 10 EMA has been support since the week ending 4 March 2011. Notably, price broke the weekly uptrend line drawn from January and RSI dipped below its uptrend line. Trend line breaks are a warning. In addition, it’s a nice ABC correction, chart wise (however charts don’t make the moves).
If price can’t stabilize here, then the break of the weekly EMA 20, price support, and the psychological 1.40 leads to a major support zone from 1.3852 to 1.3908. There are several components to this support zone. 1.3908 is 50% of the move from 1.2874 to 1.4942 and 1.3902 is the weekly pivot S2 support. 1.3862 was .618 of the move down from the Nov. 2009 high of 1.5144 to 1.1876. 1.3852 is parity. All this will make for a very strong support zone. If this zone breaks, then 1.3500 is possible. That would be at the uptrend line from the 1.1876 low in June 2010.
Here’s the weekly chart:
© Dianne Fecteau, 2011. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
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