Euro has retraced much of the move down from 1.4036, reaching a high of 1.3981 this morning. As long as prices stay beneath 1.4036, one can argue that the high was the end of an ABC correction from 1.2859. Remember, that high was within a strong resistance zone consisting of trend and speed lines. On the way down, the pair broke key support. There have been some bearish signals in different periods.
From 1.4036, it's possible to count five waves down to 1.3752 on the three-hour chart. As a result, this could be wave two. The rate of ascent is steep which is generally unsustainable. What I don't like on the hourly chart is the momentum, as represented by RSI. Note that it didn't drop that much. In addition, the low was almost at the 50% retracement of the 1.3429/1.4036 move. However, my bias is short and I may establish a short position. I'm looking at shorter periods to decide on this. The stop can be tight since over 1.4036 will tell me I'm wrong.
Support is at 1.3880, 1.3805, 1.3752/32 (recent low and .50 retracement), 1.3685 (fib confluence), 1.3500 and 1.3429. If prices start to edge above 1.40 and sustain a close over 1.4036, the next resistance is 1.4282/95 and 1.4317.
© 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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