By Mohammed Isah of fxtechstrategy.com
: This currency pair saw a consolidation of corrective price action this week that pushed it to a higher close at 1.5697.
We expect, however, the resistance zone between the Dec. 30 level at 1.5830 and the psychological level of 1.6000 to contain corrective strength.
This should reverse the pair back down in line with its broader medium-term downtrend.
To view a chart of the pair,
Further out, overhead resistance is located at the Feb. 3 high at 1.6068, where a reversal of roles is expected.
On the downside, strong support lies at the 2010 low at 1.5532 where a clean penetration will activate the resumption of the medium-term downtrend toward the 1.5351 level, the May 12 high. A turn below there would open up further downside risk toward the 1.5276 level, the pair's .50 Fibonacci retracement (1.3501-1.7041 rally) ahead of its May 10 low at 1.5057.
Overall, although the pair is consolidating following its recent declines, risk of further downside weakness remains toward the 1.5361 and 1.5276 levels in the days and weeks ahead.
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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.