EURUSD – Slowing down warns of a correction
The Euro broke resistance specified in yesterday’s report 1.3174, and came very close to hitting the suggested target of 1.3200, but it stopped (for the second day in a row) only 6 pips before it, before retreating significantly to 1.3181. The fact that the rising move is slowing down warns of a possible correction for the whole rise from Friday’s low. Such a correction would be a violent one, with its size a little less than 200 pips, since its ideal target is at 1.3086. Therefore, we should keep eyes & mind open today, and consider all scenarios, and keep separate trading plans ready. What is requested from the Euro now is to break the resistance 1.3227 which it is trading almost 20 pips below. This resistance is the key to more fireworks, and is the key to 1.33. If broken, we will target 1.3311 first, and at a later time 1.3383 as well. On the other hand, correction possibilities remain weak as long as we are trading above 1.3153. But if broken, we will be already in a short term correction, which will ideally target the single most important support for now 1.3086. And if this one is also broken, we will drop to test Friday’s low 1.2979.
• 1.3153: Fibonacci 38.2% for the rise from Friday’s low.
• 1.3086: the rising trend line from Jun 29th low, and Fibonacci 61.8% retracement level for the rise from Friday’s low. The single most important support for the time being.
• 1.2979Friday’s low, and the launch point of this recent rising move.
• 1.3227: the falling trend line from yesterday’s high on intraday charts.
• 1.3311: Mar 24th low.
• 1.3383: Mar 31st low.
USDJPY – The first target of the falling wave is met
The Dollar/Yen dropped in the down wave we have talked about, it broke the support specified in yesterday’s report 86.25, and successfully reached the first suggested target 85.52. With this, the first target of the falling wave is met, but what are the next targets? In the attached chart, which is a weekly one, we can see the falling channel from Sep 07 top. Although the bottom of this channel is very far away, and is just above 74, but there is an interesting trend line inside it, combining the monthly lows of Dec 08, Jan & Nov 09. This line is around 82.65 currently, providing us with a perfect target for this dropping wave, since we still expect, as we did before, that it will dive below 84.81. Therefore, we expect the price to reach this target, and as we do, we also realize that the limited volatility of this pair indicates that this will take some time. As for the short term, the support is at 85.31, and breaking it would indicate that we are already moving lower with the objective of breaking 84.81, and reaching lows not seen in 15 years. This break will target 84.81 first, then 83.87. The resistance is at 86.02, and if broken, we will target the important 86.81, then 87.49.
• 85.31: Asian session low.
• 84.81: Nov 27th 2009 low, and the low of the last 15 years.
• 83.87: Fibonacci extension level 138.2% for the falling wave from 86.86, compared to the wave which started at 88.10.
• 86.02: the falling trend line from 88.10 on the hourly chart.
• 86.81: Jul 26th & 27th lows, and an obvious hourly support.
• 87.49: Jul 29th high.
GBPUSD – Fibonacci 61.8%, down to the pip!
The Pound broke the resistance specified in yesterday’s report 1.5929, but it did not reach the suggested target 1.6012, it rather stopped at 1.5965. Yesterday’s high is no coincidence, it is actually a demonstration of an almost unbelievable accuracy, since it is, exactly, and down to the pip, the 61.8% Fibonacci level for the who drop from 1.7040 to 1.4227 (please refer to the attached chart). Such accurate turning points are usually a very strong negative technical signals, especially that we are talking about a correction level for a move which achieved more than 2800 pips, and lasted more than 9 months. Therefore, if the Pound fails to break it today, it will be in a awful position, with a very large possibility of a medium turning point, which will take the price, from yesterday’s high, hundreds of points down, in the near future. So, today’s resistance is 1.5965, and the Pound need to break it to maintain the positive technical outlook, and to keep moving along a very obvious uptrend. If broken, things will go smoothly, and the price will target 1.6067, and may be later 1.6152. The opposite scenario is to hold below 1.5965. In this case, the price will start falling to test sort term support, which we see today at 1.5905. In case this support is broken, a correction for the whole move from 1.5549 will be initiated. Such a correction will ideally target Fibonacci retracement levels 1.5806 & 1.5706.
• 1.5905: Monday’s high.
• 1.5806: Fibonacci 38.2% for the whole rise from 1.5549.
• 1.5708: Fibonacci 61.8% for the whole rise from 1.5549.
• 1.5965: Fibonacci 61.8% retracement level for the massive drop from 1.7040 to 1.4227.
• 1.6067: Feb 3rd high.
• 1.6152: Aug 27th 2009 low.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.