Welcome to TheLFB's technical overview of Eur/Usd trade. The charts are updated daily prior to the start of the U.S. session and reflect what the trade team sees as price action unfolds during the course of a 24 hour period.
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Latest Updates: Feb 02 10 02:45 EST
Overall View: Looking for a bullish reversal
4 Hour Chart Flows: Short Price Points: 1.4193 Looking for: Buullish reversal
Momentum: The euro trend went Short on 3rd December, and has really struggled to show a real desire to break long and hold.
Elliott Wave: Eur/Usd moved higher by more than 80 pips since the 1.3850 lows were reached on Friday. This move could be the first leg of a bullish reversal pattern, which is currently testing the upper resistance line, connected from the 1.4580 highs. A daily chart close above the line will suggest a move towards the first target at 1.4193.
Overall, we are looking for a Long, corrective move of a huge black wave 2/B, as wave 1/A looks to be completed with a five wave bearish structure (daily chart).
Daily chart trend: Short. Main price points: 1.5143. Looking for: Low of a Short, wave 1)/A)
Eur/Usd dropped more than 1300 pips after the 1.5143 top was hit, and did it in a very short period of time. Such a sharp move confirms that a new, temporary Short trend is in process. The market is now searching for the low of in impulse bearish structure in a Short blue wave 1)/A), before a Long wave 2)/B) reversal appears.
The pair fell close to the 50% (1.3800) Fibonacci retracement zone of the previous red wave C distance, which suggests a mid-term bounce into a Long, wave 2/B correction. Bullish divergence is shown on the RSI indicator.
Once a Long wave 2)/B) reversal is also complete, an even larger down-trend will be expected technically, in a blue wave 3)/C) leg towards the 1.3000-1.3300 zone.
Weekly chart trend: Mixed. Main price points: 1.2329 and 1.5143. Looking for: Move lower, away from wave (X) top
Prices fell heavily in the middle of 2008 from the 1.6036 highs, down to the 1.3805 area. The price structure of that move was completed with three waves followed by a sharp gain in wave A/1.
The price structure looks complex as the market may react with another leg down in wave Y if the bullish move from 1.2329 zone to 1.5143 2009 highs was a Long wave (X). The possible wave (X) was labeled because of the very choppy and slow price action, which has a personality of another, huge correction of a down-trend.
If this wave count is correct then traders may look for a bearish leg towards the 1.2329 area in year 2010.
Over the past two months, the RSI indicator has broken through the lower line of a sharp diagonal formation, and already fallen below the 50% line, which indicates that the wave (X) top is in place and Short trend in process. Prices were also unable to break through the 76.4% Fibonacci resistance area and the upper line of a trading channel at the end of 2009. Bearish expectations in 2010 persist on this time-frame.
