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Chart of the Day Update:
Euro Not Finished Yet “Part 2”
In regard to the “Euro Not Finished Yet” article posted on Monday, we are updating the potential in the long side of EUR/USD. The bottom line is, if you are not already in a long euro trade, do not worry, it is coming back to pick you up. It may not be today, maybe not tomorrow, but it will dip down before hitting 1.5200 - 1.5250 zone.
The U.S. dollar is lower across the board, which is quite interesting in that S&P futures (global market view) still trade below the 1112 yearly top, established on 16th of November. One would have expected equity traders to back the risk tolerant move, if that is actually what it was.
The main reason for a lower Usd against the major pairs, shown in the last two sessions, could be that gold trades just 13-15 dollars below the 1200 level. Oil also gained in the last couple of hours of U.S. based trade, after a test of the 75.50 support area.
The U.S. dollar index is underway to 73.50-74.00 area, while the EUR/USD looks to be targeting the 1.5200 – 1.5250 zone, after today’s 1.5000 breakout.
On the chart bellow, we can see a triangle formation, which is placed in the middle of a huge up-trend that started in March 2009. Since then the EUR/USD gained more than 2600 pips.
Triangle formations are continuation patterns that indicate a trending move is to come once the upper line of a triangle in a bull market is taken out, or support line in a bear market.
TheLFB Charting: EUR/USD 4 Hour view
The chart shows that the main breakout point for the current U.S. dollar weakness against the euro was the psychological 1.5000 level, where Long and Short position traders were battling over the last few weeks.
One of the basic rules of the trading pattern shown is that when the breakout appears, the market travels the same distance as the largest leg within the pattern. Following on from that, traders may expect to see move up, near to the 1.5200 – 1.5250 zone over the next few days.
On the intra-day 1 Hour chart below, the next target and Fibonacci resistance area is shown between the 1.5140 – 1.5170 zone, where a black wave III) may then find the top. The patient traders who are not long already should stay aside, and wait a few sessions or even days for deeper levels to come (pull-back). That looks as though it will happen somewhere in black wave IV of the chart below, before new long positions may be established again. We will signal as things unfold.
TheLFB Charting: EUR/USD 1 Hour Elliott Wave view
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