The FX Trader’s view – We alerted readers to the bearish possibilities in EUR/USD in our 10th December Update, when further confirmation was still needed. There have since been some encouraging developments, and the current chart structure implies there is more to aim for on the downside.
- WEEKLY CHART:
Excellent resistance was seen at the 76.4% recovery level, when the whole upmove from the Mar-09 low was showing signs of maturity.
The structure of the fall suggests that bears’ energy is far from spent – any s/term rallies should prove temporary.
We have re-calculated our pullback levels, taking the Oct-08 low as the starting point – will 38.2% provide s/term support? – Probably. - DAILY CHART:
The break below an earlier bull channel base plus 1.4623 03-Nov low gave a bearish signal, confirmed by violation of the 23.6% pullback level.
The recent Dec-Jan bounce was meager, finding resistance ahead of that 1.4623 low (and close to the 38.2% bounce level at the time).
Any rebound from around the 38.2% pullback area should be short-lived, dying out ahead of the 1.4582 13-Jan high.
Whilst the lower pullback levels should be kept in mind (see Weekly chart) we draw attention here to the 1.3737 Mar-09 high which previously provided good support in Jun-09, but more importantly to the 1.3672/54 area, an equality target (1.5144-1.4216 decline extended off 1.4582 high) and Fibo projection. We are minded to give these more emphasis than the pullback levels. A better rebound from near here would be sought.
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