Daily Technical Update
January 26, 2010 (EUR/USD) Bearish Scenario Triggered @ 1.4120



* 1H: The set up from last session materialized into a decline in the Asian session, see above chart with original risk assessment. The anticipation was on point as the momentum was showing bearish divergence and the rally was very laborious. (Refer to Daily Technical Update 1.25.2010 EUR/USD)
* The decline that started after the Asian session got on way broke the short-term trendline and came in 2 strong bearish candles that closed at 1.4120. The anticipated trigger at 1.4110 yielded a 1.6:1 reward to risk ratio using the 3 ATR method and with a target at 1.38.
* Now, the process is monitoring the decline, which so far looks healthy, although some support can be expected at the 1.4030 area (previous bottom on 1/21/2010). Also the stochastic is oversold, though it is showing continuation of bearish strength.
* 4H: The stochastic is oversold, but as not turning up. It can easily stay in oversold ranges if price action display strength like it did in the Asian session. The European session was not very bullish, but the start of the US session is pointing to continuation.
* The target is 1.38, but expect some pause around the 1.40 area. The ability for bullish momentum to reach overbought in the previous session suggests the market may be in somewhat of a ranging mode before bearish forces completely take over.




Fan Yang
Currency Analyst
Commodity Trading Advisor

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