My dear friend in fxbeat fb, telegram fxbeat group andostglinde.blogspot.com readers..Last week on Friday, the euro was falling until another episode of the Greek drama unfolded, and the Euro went from a daily low of 1.1279 to a daily high 1.1429 in about 4 hours.
Unfortunately, this move proved that the Euro is still connected with the Greek ongoing drama, and that significant moves will continue to be dependent on any good or bad news about the development of the financial problems of Greece. It is highly probable that we will finally see an end to this story in the development expected today & tomorrow, when Greece is going to present a list of economic & financial reforms, and the EU will either approve them or not.
Approaching the end of this story, has brought back the long term outlook under the spotlight. In my opinion, it is highly probable that the Euro will start to move significantly higher, once an agreement is reached. The long term technicals favor the upside, for months & years to come.
Please allow me to talk once again about why I think there is a very good chance that the Euro has ended a 6-year drop from 1.6038, and that it will move much, much higher in the next few years. My favorite possibility is that we may have seen a very important bottom in January, and to keep this idea in mind as long as it holds is very important. On January 26th, the Euro bottomed at a new 11-year low at 1.1097. At first, this may seem like just another low in this sharp downtrend, but it may be a very, very special one! In the support section of the reports issued in the second half of January, you may have seen this support included every single day:
This means that stopping at 1.1097 has a lot of meaning! The equality target is one of the favorite targets in The Wave Principle (Elliott Wave Theory as it is known to many), and here we have one of the most praised equality relationship among all of Elliott waves: the equality relationship between (a) & (c)! This pushed a very important question under the spotlight: The Euro has been in a complex correction pattern (probably a double-three) since it reached its all-time high 1.6038 in July 2008, Does reaching 1.1097 mean this correction is over...?
It may be still early to tell, but bouncing for more than 430 pips from 1.1097 sure looks like a good start. Therefore, we should maintain this as the most important question for now. If the answer is yes, imagine the consequences! The move for which this level is calculated is the cyclical (very long term) enormous move from October 2000 all-time low 0.8220 to July 2008 all-time high 1.6038, which caused the Euro to almost doubled in value against the Dollar. The magnitude is unbelievable! We are talking about a 7800-pip move on the span of about 8 years, which almost doubled the value of the currency! Therefore, the idea that the correction for this move may has ended with such a breathtaking accuracy sends shivers down my spine. If the wave count on the attached weekly chart (chart #1) is correct, the Euro is already very attractive to buy for long term investors, and it will become very attractive for medium term & short term investors once we have a credible confirmation that wave C has reached its end (PS: reaching 1.1097 significantly improves the possibility that wave C has ended, but up until now there is no confirmation of that). The size of the uptrend which will follow this 6-year correction pattern is going to be very big, as trading above 1.60 will be expected once we are done with this correction, given enough time of course. Enough time here may mean years, but we are talking about 5,000 pips at the very least. This is very exciting.
On the other hand, if we cannot defend the bullish territory at 1.1097, this could very much open the way lower to the last level of the important cyclical retracement levels at 1.0454! Bulls need 1.1097 to hold its ground, we need to defend it well, and need to realize that it is from this very point that the armies of the bulls will start fighting to reach 1.70 or above! The battle to reach such unimaginable levels has already started at 1.1097!
As for the shorter term, the price has retreated a little less than 50% of Friday’s lo-hi move. The 50% level is at 1.1354, and it is providing initial support. More support levels of the same kind are offered at the Fibonacci 61.8% & 71.4% retracements at 1.1336 & 1.1322. If the price bottoms to any of those levels, a rising move will be expected. But if the price breaks below all 3, more weakness will probably follow. What looks like a logical trading plan this morning is to buy if the price bottoms very close to 1.1354 or 1.1336., with a stop below 1.1322 with enough number of pips, and a limit above Friday’s high. However, in the unlikely event that 1.1322 is broken, 1.1279 will be expected to come under attack, and may be even 1.1264 & the very important 1.1222. This last level is key for the long term bullish outlook, because a break below it could put pressure on January’s 11-year low 1.1097, but between these levels we also have 1.1159 as a potential support.
Resistance can be found at 1.1374, where the falling trend line from Friday’s high is currently running. A break above this level, especially if it comes after bottoming very close to 1.1354 or 1.1336, should be vied as a bullish signal. This break, in case it actually happens will be expected to target the micro term resistance area 1.1401/8. A break above this area will open the way higher towards Friday’s high, ahead of 1.1466 & 1.1499. A break above this level will make it highly probable to see a one-month high above 1.1534. In this case 1.1567 & 1.1596 make good targets.
No comments:
Post a Comment