EUR/USD Bearish Flag – Forex Technical Analysis
March 3rd, 2010 Posted in Euro-Zone, Technical Analysis
Below the EUR/USD daily chart shows a continuation pattern has formed, leading us to believe that a breakout of the pair may occur in the near term.
We can see that the pause in the downtrend was preceded by a steep fall in the value of the currency pair from the price of 1.4025 to 1.3580, thus creating the flag pole. The bearish flag below represents a pause in the downtrend of the EUR/USD. The market may simply be trying to play catch-up as the bearish trend may have gotten ahead of itself.
Also noted on the chart is a Fibonacci retracement of the previous long term uptrend that began in early march of 2009. The pause in the trend takes place between two major Fibonacci numbers; the 50% level and the 61.8% level.
Based on the size and the duration of the flag pattern, we may expect the price to breakout below the lower border of the flag. The price could measure 445 pips, roughly the size of the flag pole prior to the start of the pattern. This would set the price target close to 1.3215.
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Tags: Bearish Flag, Continuation Pattern, EUR/USD, Forex Trading, Technical Analysis
