Prices took out support at 1.2830, the 23.6% Fibonacci expansion level, after completing a bearish Three Inside Down candlestick pattern below falling trend line resistance set from May 2011. The pair is now staging a shallow bounce after testing the 1.27 figure, with initial falling trend line resistance lining up at 1.2794. This is reinforced at 1.2830, now recast as resistance, with a break above that exposing 1.3041. Alternatively, a drop below 1.27 targets the 38.2% Fib at 1.2619. We continue to hold short.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
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