Hi everyone, good day and the market reopened for the new week as per many traders expected, the Euro dropped and reached the long term Dow 66.7% at 1.0826. As said in last week’s reports, the double break below 2 important levels at 1.1159 & 1.1096 was strongly bearish. The target for this double break was 1.0826, and the Euro took very little time to reach it. Today’s current daily low, which is a 12-year low (it is the lowest price seen in 11 years & 7 months to be exact), is only 9 pips below this Dow level. The question now, as is it always the case when the price bottoms pips away from important levels is: Can the Euro bulls, who were slaughtered last week, come back to create bullish momentum after reaching this level?
The accuracy is very exciting, but we have learnt from the strength of this downtrend, that accuracy by itself is not enough. We need to see more evidence of a bullish attempt before we jump on the bullish wagon.
First resistance is at 1.0888. This level combines the highest price seen after the payrolls number, with the falling trend line from Thursday’s high, and the bottom of the falling channel which can be drawn using the daily highs for Tuesday & Thursday of last week . This looks like a strong area, and any recovery attempts that fail to break above it will be short-lived. If, however, the price breaks 1.0888, a recovery would be already underway. The targets for this recovery include micro term levels like 1.0930, 1.0966 (Important), 1.1001 & 1.1029. These are all retracement levels calculated for the drop from Thursday’s ECB-top 1.1114 to today’s 12-year low & probable Dow bottom 1.0817.
It is unlikely at the moment that a recovery can push past 1.1029, and reaching 1.1001 or 1.1029 again would probably provide the eager bears with another chance to go short again for the medium term. However, in case the price breaks above 1.1029, this means that it will be ready for the important test of 1.1114.
On the support side, the area 1.0826 to 1.0817 comes first. A break below this area indicates that the downtrend is still strong and hungry. The first target for breaking this area is 1.0792 followed by a more reasonable target at 1.0761, followed by 1.0717 & 1.0683. However, the next long term retracement level is not until 1.0454. One more thing I'm still travelling right now. Thanks Guys...
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