By Mohammed Isah of fxtechstrategy.com
: Since the beginning of the week we have written that this currency pair was vulnerable to the downside. This analysis was strengthened after the weekly chart showed a second shooting-star candle pattern.
The pair has held firmly below its violated longer-term rising trend line and breaking below its strong support at the 1.4625 level on Friday.
We still view this break with caution, but a firm hold below the 1.4625 level followed by further losses -- possibly toward the Oct. 2 low at 1.4479 -- will neutralize that concern and create further downside scope.
Another implication of the violation of the 1.4625 level is the pair's break of its pattern of higher highs and higher lows. That break has halted its medium-term uptrend and turned the focus to the downside.
The risk to our analysis will be a break back above the 1.4625 level. Further strength could then push the pair higher toward the 1.4799 level, its Nov. 20 high, where a reversal of roles is expected to occur and turn the pair back down again. Further out, resistance is seen at the pair's Dec. 7 high at 1.4903 and then at its year-to-date high at 1.5143.
With the pair having violated its important swing low at the 1.4625 level, risk has turned to the downside.
Mohammed Isah is a technical strategist and head of research at FXTechstrategy.com, a technical-research Web site. He has been trading and analyzing the foreign exchange market for the past seven years. He formerly traded stocks before crossing over to the forex market, where he worked for FXInstructor LLC as a technical analyst and head of research before joining FXTechstrategy.com. He has written extensively on the forex market and technical analysis and his articles have been featured in The Technical Analyst Magazine, The Forex Journal Magazine, The International Business Times and FXstreet.com. At FXTechstrategy.com, he writes daily, weekly and long-term technical commentaries on currencies and commodities, which are offered to its clients. He also produces
for his subscribers. He provides full coverage of the forex market with specific focus on G10 currencies as well as the commodities markets, with focus on five key commodities.