EUR/USD Under Pressure Below 1.3830

EUR/USD (daily chart as of January 2, 2014) overshot key resistance at 1.3830 on December 27 and reached a fresh high of 1.3890, right at the upper border of the short-term uptrend channel (bold green parallel lines on chart). Later, however, price lost momentum and closed at 1.3738, just above the lower border of the channel. The candlestick on December 27 had a very long upper shadow that was three times the height of its real body, indicating very strong resistance at the session high.

Price managed to stay within the uptrend channel for the following two trading sessions, before it tumbled today by breaking below the channel and wiping out all of the gains in the previous seven trading sessions without even testing 1.3830. It appears that the currency pair is under pressure below 1.3830, and if price is unable to hold the daily EMA 50, further downmoves may be expected ahead. The daily EMA 50 acted as strong resistance from November 4 to 7 (red arrow on chart) and as strong support on December 4 (green arrow).

Support levels below:
1st support: 1.3620 (December 20 low) or daily EMA 50
2nd support: 1.3520/30 (December 3 and 4 low) or daily EMA 100
3rd support: 1.3400 (November 21 low) or daily EMA 200

Resistance levels above:
1st resistance: lower border of the short-term uptrend channel
2nd resistance: 1.3890 (December 27 high)
3rd resistance: upper border of the short-term uptrend channel