EUR/USD – The market has now entered a period of consolidation which we contend to be a bearish consolidation in light of the reversal on the weekly chart. Any rallies should now be very well capped ahead of 1.4860, with a downside break now favored to test critical support by the 50-Day SMA at 1.4660. The 50-Day SMA has supported the up-trend throughout much of 2009 and it will be interesting to see how the market reacts from there. A break and close below the 50-Day would be viewed as a significant development with the price action suggesting a material shift in the medium-term structure. Below 1.4660 would then expose 1.4480 further down.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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