EURUSD—trying to base

Euro has dropped to a low of 1.4264. The bear flag target (see yesterday's blog post) is 1.3994 so obviously it has a way to go. However, it may be trying to base for a recovery.

The hourly candle's low that completed at 9 AM was 1.4264; the one that completed at 10 AM was 1.4265; and the one that just completed at 11 AM was 1.4272. Yesterday, I wrote that 1.4288 was support. If the basing attempt fails, the next support level is 1.4236, 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). After that is 1.4096 (C wave target if .618 of A (see Monday's analysis), and 1.40 (psychological).

If it consolidates before additional downward price movement, expect it to reach a high of 1.4347/53 or 1.4378/90 before turning down again. Above that should find resistance at 1.4444. I would be highly suspicious of additional downward moves if it regained that much. However, there have been a lot of back and forth in the markets as uncertainty continues to cast its shadow.

© 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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