Euro closed out the month with a significant bullish engulfing candle that completed a morning star. So on the monthly chart, things look positive for this pair. It’s possible the pair could trade back up to the downward trend line at just above 1.45. If you look at a daily chart (not shown), you could make an argument for being in an overall impulsive wave at this point. Before one rushes out to go long, it’s also worth noting that momentum, as represented by RSI, is not great on the monthly chart.
However, there’s a lot of emotion around this pair (most pairs, actually) and there could be an equally strong reaction this month. Also, it’s nearing a strong resistance point with 1.3125 being .382 retracement of the move down from last November (it touched 1.3106 last week), and the 1.3108/50 (Elliott calculation and bull flag target). If it exceeds 1.3150, it’s on track for the price target of the inverted head and shoulders at 1.34. If Wave C was 2.168 times that of A, the price target is 1.3433 so this is corraborating evidence. There are lots of bears out there, though, in the 1.3150 area so this is the most interesting level. If it can overcome it then I’ll probably go long. If not, then short.
Support is at 1.3026, 1.2981, 1.2950/30 (note the closeness of these levels so this is a strong support zone), 1.2875, 1.2840, 1.2794, 1.2733, 1.2683 and 1.2523. Resistance is at 1.3106, 1.3150, 1.3240, 1.3300, and 1.3430.
Here’s the monthly 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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