EURUSD: While Indecision And Consolidation Shape Up, The 1.3259/98 Area Is Still Expected To Attract Sellers
EURUSD: While price action is limited to the 1.2330 level, its YTD low and the 1.3259/98 area, its Oct 10’08 low/Oct 30’08 high, EUR looks to trade sideways consolidating its recent medium term decline off the 1.6038. This is clearly evident on its 4 hourly chart where a symmetrical triangle (two converging trendlines drawn along falling swing highs and rising swing lows) has now formed. This pattern usually resolves in the direction of the underlying trend but that does not occur always. Having said that, our overall medium term outlook remains to the downside for a break of the 1.2330 level and resumption of the pair’s declines started at the 1.6038 towards the 1.2134 level, its .50 Ret (its 0.8231-1.6038 high, monthly chart) ahead of the 1.1827 level, its Mar’06 low and subsequently its Nov’05 low at 1.1640.Resistance is now seen at 1.3058/05 level, Oct 23’06 high/.618 Ret (0.8231-1.6038 rally, monthly chart) with a turn above there targeting the next two upside objectives at the 1.3259/98 area, its Oct 10’08 low/Oct 30’08 high and the 1.3666 level, its Dec’04 high. The consolidation highlighted above is now seen in most G10 currency universe plus our 7-currency model analysis. On the whole, while the market takes a rest, the completion these consolidation patterns is expected to break in the direction of the primary trend.
SupportComments
1.2728Oct 22’08 low
1.2484 Oct’06 low
1.2330/24 Oct 28’08 low/Jan/April’06 highs
1.1827Mar’06 low
ResistanceComments
1.2866Jan’07 low
1.3058/05Oct 23’06 high/.618 Ret (0.8231-1.6038 rally, monthly chart)
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