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EURUSD Daily Forex Analysis: Another Black Candle Formed on Today's Push Higher

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I mentioned in yesterday's post that it was doubtful that 1.3450 was going to break again, but that I would trade a break below it. I also mentioned I would look for long trades on a break above the red line that was drawn on the chart. We definitely saw a break above the red line. Hopefully this was a help to someone as they planned their trades. Today has been exciting as a new black candle was printed on the daily chart.

As far as further gains on the pair for the day I am doubtful they will happen. The daily R3 is at 1.3672 and for this pair it is closed beyond less that 3% of the time. In addition to that Resistance, the high from 02/23/10 at 1.3687 is just above current price action as well. The catalyst for this move has been a bit more difficult to discover in its wake. New and Existing US home sales were both lower than expected for January, but whoever didn't expect that was in la la land. Technically the pair had been off oversold levels since the 16th.

Moving forward, I am about ready to call an end to the down trend for the short term. A meaningful Retracement is definitely overdue on this pair. However, if the real sentiment is for more USD gains in the coming months, then we may just waste a few weeks in daily chop between 1.3450/800. Right now I will be looking for a possible reason to short this strength to the 1.3550 area, getting out at the first signs of continued strength.

As a side note I am particularly interested in the GBPCHF next week. The pair has bumped into the low from 01/11/10 at 1.6314 in NA morning trade. Knowing what I do about the pair. I will be shooting for a target around 1.6450 in the first part of the week. After that, 1.6200 targets look really nice. The initial target of 1.6450 may move once today closes but that general area looks great. Longer term for this pair, expect a break of 1.6200 because if that cannot happen then the Range is holding and 1.7000 comes back into focus.