EURUSD: As recovery off the 1.2330 level has now materialized into a symmetrical triangle(clearly seen on the 4 Hourly chart),EURremains trapped and now looks to break out of it as it approaches the pattern’s apex. The break is expected to create directional moves either way but based on the direction of the main trend which is down, we expect that break to resolve in favour of the said trend with the 1.2330 level seen as the main target ahead of the 1.2134 level, its .50 Ret (its 0.8231-1.6038 high, monthly chart).The next two downside targets are located at the 1.1827 level, its Mar’06 low and ultimately its Nov’05 low at 1.1640.On the upside, a break out to the upside will push the pair towards the 1.3058/05 level, its Oct 23’06 high/.618 Ret (0.8231-1.6038 rally, monthly chart) accompanied by the 1.3259/98 level, its Oct 30’08 high/Oct 10’08 low and then the 1.3666 level, its Dec’04 high. Until an eventual resolution of this pattern is seen, range trading should continue to be maintained between the 1.2330 and 1.3298 levels. On the whole, our medium term outlook clearly points lower but a break and close below the 1.2330 is required to confirm it and trigger its medium term weakness.
SupportComments
1.2728Oct 22’08 low
1.2484Oct’06 low
1.2330/24Oct 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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