Euro has already found a slightly lower low than last week by touching 1.3509 so far this morning.
A look at the weekly chart below suggests a couple of possibilities from an Elliott Wave point of view. First, the pair could be beginning a coil within a triangle with 1.4282 the A point, 1.2874, B, and 1.3682 C. If so, expect D to fall around 1.30 and then a final push upwards before a drop out of the triangle to new lows. My personal view (if this is a valid interpretation) is that I'd have preferred to see wave C at a higher price before the drop to D began.
Alternatively, wave 2 could have ended with the 1.4282 high (it has a nice 3-wave structure from 1.1892) and we could be seeing a resumption of the third wave action that began at 1.5144. If this interpretation is valid then much lower prices are ahead eventually. Of course there would be many rallies along the way. What this cannot be is wave four of the move down from 1.6041 because wave four cannot move beyond the end of wave one which would have been
What is clear on the chart is that last week was another indecisive week as represented by the doji candles. Both of them had longer upper shadows which hint that higher prices were rejected. This makes sense in light of a general uncertainty in various markets. However, it doesn't give up much to trade on. In order to trade Euro, one would want to watch the NorAM action through about 10 AM EST and take direction from that. The price drops have slowed since NorAM began.
1.3485 is .382 of the move from 1.2874 to 1.3862, close to the round number of 1.35 so buyers may begin to come in and the momentum will reflect that on the shorter-term charts. If 1.3485 doesn't hold, there's a zone of support down including 1.3436/12 (fib confluence), 1.3396, 1.3368 (50% of 1.2874 to 1.3862), and 1.3300 (round number). Below that would be serious and could see 1.30, in line with a triangle pattern mentioned above.
Here's the weekly 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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