EURUSD—Summary

I’ve been on vacation the last week and am not fully back but have taken my first peek at the markets in a week this morning. There is much going on with the Euro.

First, on the monthly chart, the pair has broken the steeply ascending uptrend line with its drop yesterday. That is not too surprising—steep angles are difficult to maintain. The question is whether this is now the wave three down that an Elliott interpretation supports.

Euro never regained the 1.4697 prior high which shows weakness. From a daily perspective, the potential bullish triangle appears nullified by yesterday’s drop. On my daily point and figure (P&F) chart, the pair generated a sell signal.

The low this morning was 1.3837, forming a hammer on the three-hour chart. The pair has bounced sharply from there but on the 15-minute chart, price action appears to be tracing out a three-wave correction. If so, the C wave high so far of 1.4024 is not quite equal to the A wave (1.3827 to 1.3963). If the C wave is 1.618 of A, the high will be 1.4107.

There is a resistance zone from 1.41 to 1.42. This includes the potential wave C high, the broken monthly uptrend line of 1.4147 and price resistance. Beyond that is 1.4340. However, there is strong support at 1.3820/37 and the 200 daily SMA is at 1.3912. If the pair breaks the 1.3820 support, there should be additional moves down in line with the third wave scenario that may be playing out.

© 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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