EUR USD Retreats from 14 Month High at 1 3700

EUR/USD (daily chart), as of February 4, 2013 has retreated after reaching and slightly surpassing its 1.3700 price objective late last week, when it established a new 14-month high for the pair. This occurs within a strong bullish trend that has been in place for the past six months.

The 1.3700 target area, where the price just pulled back, represents a strong confluence of resistance, as it is not only a key historical support/resistance level but also resides around the underside of a major trend line extending back to the July 2012 1.2041 low.

Despite the current retreat and pullback from 1.3700, the trend bias for EUR/USD continues to be strongly to the upside. Strong support to the downside on the current pullback can be found around the major 1.3500 level, and then the 1.3400 area, which represents the top point of the pennant pattern that was broken to the upside more than a week ago. The key upside level to watch for a bullish trend continuation remains at the 1.3700 level. A breakout above that level, which would confirm a continuation of the current uptrend, could move towards the major 1.4000 resistance level as its primary price objective.

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