My short position was stopped out at 1.3514 (-14 pips).
Euro is headed up again, possibly to the intersection of the upper boundary of the channel (rectangle) and the 50% of the retracement of the move down at 1.3645. This rectangle could also be a daily flag so close attention needs to be paid at its upper boundaries. It could also be the beginning of a third wave down on the daily chart.
Within the rectangle, there are two impulsive waves down of five waves each separated by a three wave correction. Waves one and three are 318 and 315 pips respectively which means wave five must be less than 315 pips (an EW rule is that wave three cannot be the shortest wave). Because wave two was sharp, wave four should be less so (the guideline of alternation).
Resistance is 1.3590 (confluence and parity) and 1.3645 (see above). Above those would bring 1.3700, 1.3750 and 1.3862 to the table.
Support is at 1.3429 and 1.3380.
We'll just have to wait to see but my current plans are to go short at the upper boundary or, if momentum seems strong, buy on a breakout (most likely on the pullback of a breakout).
Here's the three-hour chart:
© Dianne Fecteau, 2011. 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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