EUR/USD Drops to Strong Support Confluence

<p>Price action on EUR/USD (daily chart) as of October 11, 2012, has dropped down and bounced off a key confluence of technical support factors. These […]</p>

Price action on EUR/USD (daily chart) as of October 11, 2012, has dropped down and bounced off a key confluence of technical support factors.

These support factors include: the important 1.2800 support area, the 200-day simple moving average, and a short-term bullish trendline originating from the late July 1.2041 low. Because several strong technical factors are potentially providing support for the pair, EUR/USD can be seen to be at a critical price juncture. If the current bounce off support extends to the upside with a re-break above 1.3000, the price could move towards a re-test of the mid-September 1.3170 high. Any further breakout above that resistance high, continuing the current short-term uptrend, could move towards further key resistance up around the 1.3500 price region.

To the downside, if bearish price action carries enough downside momentum to break down the strong current support confluence, key near-term support further to the downside potentially resides around the 1.2600 level.

 200-period simple moving average in blue, 50-period simple moving average in brown, 8-3-3 slow Stochastics on 2nd pane.

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