5/21/2012 – Price action on EUR/USD (a daily chart of which is shown), as of 5/21/2012, has made a slight corrective rebound after forming a potential double bottom low late last week just under the key 1.2650 support region. This potential double bottom, which approaches the lows established in mid-January, occurs after a steep drop beginning two weeks ago below the key 1.3000 support/resistance level, which was also the bottom of a large triangle consolidation pattern extending back to mid-February. Despite the current corrective bounce, the overall directional bias for the pair continues to be to the downside in line with the prevailing longer-term bearish trend. In the event that the double bottom is subsequently broken to the downside with a strong breakdown below the 1.2650 support region, a key downside support target resides around the 1.2500 price region.
(Chart courtesy of FXDD – Metatrader. Uptrend lines in green, downtrend lines in red, horizontal support/resistance lines in black, Fibonacci retracements in purple, 200-period simple moving average in blue, 100-period simple moving average in brown.)