EURUSD—weak

I sold short yesterday at 1.2882, not a great price but Euro has dropped some and I've taken partial profits at +71 pips. Its most recent low is 1.2792 and a drop below there could signal additional lows. The action is a little raggedy right now—there were four hourly candles with lower lows and then this last hourly candle had a higher high and higher low. It's working out the oversold status on the hourly chart and there may be a bit more of a bounce. It's easy to suspect summer doldrums at work but the Euro should have finally completed the C wave and be ready to head down again. It did drop below yesterday's hammer low on the hourly chart at 1.2840. In addition, the strongest candles are the downward ones with the white ones being small. Additional support is at 1.2768, 1.2683/60 and 1.2523.

As I wrote yesterday, however, the potential is still there technically for the pair to reach the 1.31 area. 1.3108 is 1.618 the length of the A wave; 1.3150 was the price target of the bull flag from the three-hour chart last week; 1.3094 was the spike high from May 10th. It's not looking as likely given its tired behavior. Until this pair overtakes those numbers it's a waste of time to talk about the price potential of the inverted head and shoulders.

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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