Very interesting behavior in this pair. As I hypothesized in the chart from Tuesday's blog, circle C of the wave four correction may not be over for this pair. I calculated that it could extend to 1.5681 to 1.5763. Yesterday it reached a high of 1.5508 which, if it does nothing else, negates those who believe wave 4 ended with the push up to 1.5486 earlier this week. Still, that's a long ways from 1.5681. Then too, since that high, the pair has fallen back, reaching a low of 1.5386. It's not too surprising that was the low since that is support (yesterday I identified the first level at 1.5376). What's interesting is that the push from the 3/25 low at 1.4798 (721 pips) was 1.23% that of the prior decline into the 1.4798.
For all intents and purposes, the pair had a double bottom at 1.4785 and 1.4798 with 1.5382 being the confirmation point. By reaching above that point the double bottom is confirmed. The price target from that double bottom was 1.5979. Hmmph. It doesn't look remotely possible right now, correct? If by some chance it got to that level it's going to find fierce resistance. But I doubt it will if for no other reason than that would invalidate an overall wave count that looks pretty solid. While things are looking weaker this morning, it still could achieve the 1.5681 to 1.5763. What would put that more in doubt is if the pair goes below the hammer it formed on the hourly chart (below 1.5386). It's not a perfect hammer because the upper shadow is a bit long but it did form at a support level. Additional support is at 1.5330 and 1.5130. Resistance is at 1.5486, 1.5523, 1.5576, 1.5652 and 1.5681.
For now, what's left of my long from 1.5371 is still intact and profit stopped at 1.5381. However, I'm willing to reverse and go short should the picture become more bearish.
Here's the hourly 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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