EURUSD—bear flag

On the four-hour chart, Euro may be forming a bear flag. This pair loves to stair-step its way down so this would be in line with past price behavior. The .382 retracement of 1.4697/1.4288 was 1.4444. Price reached 1.4472 in the hour ending 7 AM EDT and for the hour just ended (8 AM), the high was 1.4468. The weekly pivot calculation is 1.4455. I would not rule out a move to 1.4493—the 50% retracement—or 1.4541, the .618 retracement. The latter is just above 1.4538, the .382 retracement of 1.4942/1.4288. Regardless, the zone between 1.4444 and 1.4555 is strong resistance.

Should the stinker—sorry, Euro—get above there, it means the pair would have regained the broken short-term trend line. After that, 1.4697 should cap prices. If it does not do so, there is little resistance to the high of 1.4942.

Support is 1.4406/4378 (.382 of recent move up, confluence, near flag breakout point, polarity), 1.4348, 1.4288, 1.4186/51 (50% of the move from 1.3429 to 1.4942 and the daily 100-SMA and near .382 of 1.2874/1.4942), 1.4096 (C wave target if .618 of A—see yesterday's analysis), and 1.40 (psychological). The bear flag target is 1.3994.

I'm leaning bearish, obviously, as I added another short position. However, closing prices on both my daily and three-hour point and & figure charts, show potential breakouts to the upside. I would take them seriously if they occur.

Here's the four-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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