My dear readers and followers..the Euro dropped hard late last week, after very accurately topping at the 85.7% level at 1.1501 (Thursday’s high 1.1499). The single currency dropped to 1.1289 when the market opened for the new week, which is only 5 pips above the short 57.1% retracement. The question now is: did the Euro bottom very close to this level? And is it time to rise above 1.1534 or 1.1159?
The first sign that this is the case is bottoming very close to 57.1% level. The second is the shape of the hourly candle which was seen on the opening of the new week, which is a Doji. The third is that the lowest price seen in this falling move is very close to the bottom of the falling channel which can be drawn from last week’s top 1.1534.
However, other potential targets for a bottom include the last 2 key short term retracements: the Fibo 61.8% at 1.1264 & the level of 71.4% retracement at 1.1222. At the moment, breaking both of those levels is highly unexpected, but a bottom very close to either of them cannot be ruled out. My favorite scenario for today is to bottom very close to 1.1264 before moving significantly higher. The second favorite scenario is to continue moving higher from the current low & probable to bottom 1.1289.
First resistance is provided by the highest price seen after the nonfarm payrolls, which is 1.1353. A break above this level would open the way higher towards the micro term retracements, 1.1369, 1.1394, 1.1419 & 1.1439. The most important of these levels is probably 1.1419, which combines the falling trend line from Thursday’s high, with the micro term Fibonacci 61.8% level. As it is always the case with retracements, a top very close to any of those levels would be a weakness sign, while breaking above each of them would be a sign of strength.
As for the support, first we have the short term 57.1% retracement at 1.1285, which the price has bottomed only 4 pips above. This level is followed by 1.1264 & 1.1222. Both of these levels can provide strong support for the price, while breaking below both of them would be a sign of weakness that could affect the whole medium term bullish outlook. First target for the surprising break of 1.1222 would be 1.1159, ahead of the very important 1.1097. A clean & clear break below this level would take away our best reason for expecting a major rising move on the medium & long terms.
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