My small long position from 1.3403 stopped out at 1.3367 early yesterday morning. I then tried a short at 1.3372 which is now at breakeven. The pair is stalling. It seems to be the nature of the markets this week—the pairs don't seem to want to take a clear direction which is only saying that traders don't see a clear direction. Eventually this will work its way out.
Arguing from an Elliott Wave perspective you could say the pair should be rising as a correction from the wave down from 1.5144 to the recent low of 1.3267. If so, one should expect a rise to at least 1.3818 and probably further. This would be wave two. Then three could begin. However, at least this morning, it doesn't seem as though that's unfolding. From a cycle analysis point of view there is downward pressure on the Euro so that may be interfering.
The last hourly candle was a hammer. A drop below its low of 1.3334 will negate its bullish signal and be a sign of further weakness. There is bullish divergence, though, on the hourly chart.
Support is at 1.3334, and 1.3267. Resistance is at 1.3409, 1.3477/86, 1.3529 (strong) and 1.3591.
Here's the one-hour chart:
© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.
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