EUR/USD at key support level - seven years in the making!

By Ryan Teeples ( ForexFactory.com Member )
This may be a foreign concept to some forex traders, but there is some fascinating long-term technical analysis to be looked at on the EUR/USD. And when I say long-term, I mean LOOOONNG.

This long-term look is important right now because the EUR/USD is approaching a key resistance level that has been in play for over seven years!

(By the way, we have free daily analysis on the major pairs. Check them out here: http://www.pfxglobal.com/forex-curre...als-forum.html)

The double-top of the last six months has been completed, and we're looking for the pull-back that usually follows. Bulkowski explains that "When everyone sells their shares soon after a breakout, what is left is an unbalance of buying demand (since the sellers have all sold), so the price rises and pulls back to the confirmation point." On the EUR that's about 1.471. Today we're likely seeing that natural pullback.

And wouldn't you know, that pull-back is right at our six-year support line. So what happens if we get a confirmed break-through there?
ast time we broke through that support level in June '05, the line simply began acting as a resistance level, rather than support. So if the breakout is confirmed, but the pair starts trending back up, we can watch for our line to be a key resistance level.

But if we get a breakout and the trend continues downward, the line is still important for one reason: It signals a break from a seven year bullish run for the EUR/USD. Then, we start all over!

For a complete technical and fundamantal run-down of the EUR/USD, click here: http://www.pfxglobal.com/eur-usd/eur...x-trading.html