Archived IMT (2010.05.26)

LOWER HIGHS in the EURUSD remain the unfolding pattern since mid April, which marks the beginning of the latest downleg in the pair. Many traders who are short the currency start to panic each time the pair rises by 200-300 pts yet are ignore the fact that none of the rebounds has exceeded the prevailing downward trend line. Just as the 250-pip rally in late April-early May failed to take out the high from April 27, last weeks 3-day rally failed to take out the $1.2670 trend line resistance extending from May 2 thru May 10. Corrective rebounds are part of every downtrend; margined traders must be aware of this fact. Latest trend line resistance stands at $1.2450s, a failure of which will likely call up $1.2130s, before $1.19 emerges before quarter-end.