Key resistance at 1.4428/50 held nicely. Euro broke below the uptrend line of the rectangle and the 21-SMA on the four-hour chart that I blogged about yesterday. The low so far this morning is 1.4235. This implies that the move up from 1.4074 was an ABC correction (A= 1.4074/1.4340; b=1.4340/1.4192 and C topped out close to the point where C would equal A).
I missed the break, having knocked off early yesterday to run around town checking out dog kennels for boarding our puppy. Sometimes the home front calls. However, a rally is possible, given that the current low is close to the 50% point of the move up from 1.4074 to 1.4442. The pair might rally to 1.4328 (the 21-SMA on the four hour chart) or 1.4381, the breakout point from the rectangle. Additional resistance derives from the weekly 10-EMA (1.4317), and two fib levels (.382 of 1.3429/1.4942 at 1.4364 and .382 of 1.4942/1.3970 at 1.4341). With a rally, I'd sell weakness. If the rally does not happen (and it might not if we're in a third wave), then I will enter on smaller rallies with weakness on much shorter-term charts.
However, it's important to remember that until price drops below 1.4074, thus creating a lower low, there is still resistance up to 1.4697.
© 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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