My friends here,the Euro broke an important support when it broke 1.1296 yesterday. The subsequent drop managed to pull the single currency to a 1-month low at 1.1184. If we take a lot at the attached 4-hour chart, we can see that this low is actually very close to the falling channel, which helps us assuming it is just a corrective drop. In my previous analysis I have explained why the 11-year low seen in January might be a very important long term bottom, and finding a bottom inside this falling channel helps this argument a little. However, if this is the case, the Euro should start proving that yesterday’s low was an important bottom.
First resistance is provided by level at 1.1240, this is followed by 1.1258, but important levels start to appear at 1.1282. Levels starting here are more important and harder to overcome, but if the bottoming theory is correct, they should be broken, even if that does not happen at first attempt. The other 2 levels making the “hard” levels are 1.1305 & 1.1323. Overcoming 1.1305 is an important step in proving that yesterday’s low will hold for a very long time, but the most important step in that direction is probably overcoming 1.1350, and of course achieving a positive daily close for today, which is very important for the bullish outlook. The first target for breaking 1.1350 would be the important 1.1400 ahead of 1.1499.
On the other hand, a break below yesterday’s low will put the bullish outlook under pressure, but this outlook will become under serious pressure if the bears can pull the price lower below what is now a key support at 1.1159. A break below this level will make the possibility of a new 11-year low much more probable, and another test of 1.1097 will become highly probable. If the price is really searching for a new 11-year low, potential targets for this search include 1.1046, 1.0998, and 1.0935 & an important long term Dow level at 1.0826.
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