New high yesterday; new high today of 1.4649. The bulls are frothing at the mouth. The real Elliott Wave people (i.e. those who follow the rules and guidelines of the theory correctly and not those who distort the theory to suit their own means) are very quiet since most reasonable EW interpretations has been calling for a drop. So where might price go from here?
We're beyond a few price targets. Probably nobody much remembers the daily flag whose pole began at 1.2874 and ended at 1.3862 before forming the flag. That price target was 1.4566. Resistance is at the round numbers of course—1.47, 1.48, etc. If we are in a double ABC correction on the weekly chart, such as I posted on April 8 with the A wave beginning at 1.2859, then 1.618 of A is 1.5052. The top of the daily rectangle is at 1.5016. The two together will make for nice resistance if Euro should climb that far. Above that is the November 2009 high of 1.5144. I have a target on my daily Point and Figure chart of 1.5620 but I do not believe the European Central Bank has enough money to push it up that high, ha-ha. Everyone seems to forget this rise is taking place within some interesting fundamental factors. Euro bulls would call those sour grapes but I don't see why we all have to pretend the emperor is wearing new clothes.
Note that there is a broadening top forming. There are only two touches so far (if this is a high before a correction). An orthodox broadening top requires three touches at the top. These are deadly because they suggest a highly excited, out of control market. So if one is inclined to go long, buy on a pullback, watch momentum, and use tight stops.
There is negative divergence on the three-hour chart. Nearby support is at 1.4577 (the very steep short-term uptrend line), 1.4517 (prior resistance, short-term), 1.4451 (.618 of 1.6041/1.1876), 1.4400 and 1.4341 (lower boundary of the daily rectangle).
Here is a 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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