EURUSD—weak

Euro reached a low of 1.3831 yesterday and bounced to a high of 1.4004 where it has faltered again. I decided to short this morning at 1.3937. There has been enough weakness lately with the broken trend lines and divergence, along with the more tentative nature of the candles (i.e. last week's weekly candle of a spinning top and daily candles with upper shadows) that the earlier price targets around 1.40/41 look reasonable. So a correction appears under way. Euro bulls are trying to hang on and the price is currently hovering around the .618 retracement level of the drop from last November through June of this year.

Support is at 1.3775 (a prior 4th wave), 1.3750, 1.3630, 1.3500, and 1.3335. At that point, buyers will most likely come in with sufficient numbers to provide a base and longs can come back into play. In any case, that's my outside target for now. My interim target is 1.35 to 1.3630. If the pair manages to recover on this current skimpy correction (with a low of 1.3831), look for a clean break (a close) above 1.4004 first and then last week's 1.4159 high. If it closes above both of those I will consider the highs I hypothesized about the last couple of weeks within reach.

Here's the three-hour chart:















© Dianne Fecteau, 2010. 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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