EUR/USD – 1.3036
EUR/USD: Wave (B) ended at 1.5145 and wave I of (C) ended at 1.1876
The single currency only recovered to as high as 1.32843 last week before running into renewed selling interests and dropped in line with our expectations and although today’s breach of previous support at 1.2975-95 signals the fall from 1.3486 has resumed, near term oversold condition should limit downside to 1.2953 (61.8% Fibonacci retracement of 1.2624-1.3486) and 1.2890-00 is likely to hold on first testing, price should stay well above 1.2800, bring another rebound later.
Our preferred count on the daily chart remains that a wave (II) from 1.2329 ended at 1.5145 with A-leg ended at 1.4720, followed by wave B at 1.2457, the wave C from there was also a 3 legged move and is labeled as (a): 1.3739, (b): 1.2885, the wave iii of the 5-waver (c) from 1.2885 has ended at 1.4339 and wave iv is a triangle ended at 1.3878 and wave v formed a top at 1.5145.
The decline from there is a 5-waver (C) with minor wave (i) of I of (C) ended at 1.4218 with wave (ii) ended at 1.4580, wave (iii) ended at 1.3267 and wave (iv) ended at 1.3692 and wave (v) ended at 1.1876, this is also the low of wave I of (C) and wave II has possibly ended at 1.4940, hence wave III is now in progress with 1, 2, (1), (2) labeled as indicated.
On the upside, although current rebound suggests initial bounce to 1.3100 would be seen, renewed selling interests should emerge around 1.3180 and bring another decline to aforesaid downside targets. Only break of said resistance at 1.3284 would abort and signal a temporary low is formed and bring another rebound to previous resistance at 1.3385 but still reckon price would falter well below resistance at 1.3486, bring further consolidation. In the event euro breaks above said resistance at 1.3486, this would bring a stronger retracement of the fall from 1.4249 to 1.3628 (61.8% Fibonacci retracement of 1.4248-1.2624) but reckon 1.3782 (50% Fibonacci retracement of 1.4940-1.2624) would cap upside, bring retreat later.
Recommendation: Sell at 1.3180 for 1.2980 with stop above 1.3285.
Euro's long-term uptrend started from 0.8228 (26 Oct 2000) with an impulsive structure. The rise from 0.8228 to 0.9593 (5 Jan 2001) is labeled as wave I, the retreat to 0.8352 (6 Jul 2001) is wave II and the rally to 1.3670 (31 Dec 2004) is wave III. Wave IV from there ended at 1.1640 (15 Nov 2005), the subsequent upmove to 1.6040 (July 15, 2008) is treated as wave V, the major selloff from the record high of 1.6040 to 1.2329 (October 27, 2008) signals a reversal has taken place with (I) leg ended at 1.2329 and once (II) ended at 1.5145, wave (III) itself is an extended move with I: 1.1876 and complex wave II should be limited to 1.5145, bring wave III decline later.
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