EUR/USD candlestick analysis for February 22, 2011

The EUR/USD currency pair has found a strong resistance level near 1.3720-1.3740, to roll back further.
Earlier on a 4-hour graph the EUR/USD has formed candlestick combination Falling Three Methods, indicating downside movement.

This candlestick combination shows that the currency pair had been demonstrating upside movement for several weeks. However, near the resistance level 1.3852 (3-month high) the bears started to increase their influence and a rebound took place.
Downside movement is supported by the MACD divergence and Evening Star and Bearish Engulfing candlestick combinations on the day graph.
Break of the support level 1.3538 proves this viewpoint. Now we should expect a downside movement to the support level 1.3227, where Fibonacci correction level 61.8 is also located.
If the resistance level 1.3853 is broken, short positions should be closed as it will lead to an advance to 1.4000.

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