Forex Trading: A Longer Term Perspective Of EUR/USD

In what promises to be a quiet Asian session with no major news or economic statistics expected, we’ll take this time to take a step back in this ranging market and take a look at the longer-term possibilities for EUR/USD pair. The chart below is a weekly retracement analysis of the pair from the fall 2005 lows to the all time highs (7/08). Looking at the chart below you can see the orderly ascension of the Euro to the highs as a risk appetite continued to fuel the rally into the sub-prime mortgage crisis. The story on the way down has been very different as the worlds economic prospects have changed dramatically. The violent move down has been met with even more violent bids on the Euro to the top side, seen with the thin spikes up that have had limited price action at any significant level (highlighted below.)

However the Euro’s retracements north might be coming to an end with the world now bracing itself for the worst and the economic situation in Europe is deteriorating at different paces throughout the continent, putting even more pressure on the Euro. We will now look for some long-term technicals to provide some resistance on what could be an “orderly” move down. The 61.8% retracement level which is running with the 200 week moving average could be our long term resistance and a long-term target of the 2005 lows. Stay tuned.

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