The weekly EURUSD chart shows a clear break of the long term uptrend and we are heading for the 38.2 retracement level at 1.31. The wave magnitudes give a slightly lower target, since we are in wave 5 of bigger wave A down and the magnitude of wave 3 were 21 points, if wave 5 repeats the steepness which should limit this wave the 1.28 might be the point where wave B should start. Hence, the truth will be between 1.28-1.31 our old assumption that 1.65 is due and we were in a ABC wave down to 1.36/8 is not valid anymore. The overall count is in a bigger price and timeframe now and medium term the 1.30 area will not do the trick. As you can see, this is the steepest decline in the EURO within 10 years. Going back and using a synthetic EURO 8, it only exists for 9 years, we can see in severe recessions we had similar moves of 35 point magnitudes in the early 90's. Anyway, since we have now a full fledged banking crisis in Europe and they spend hundreds of billions as well the trend will remain for a while. In the 1.30 area roughly it's time to buy the Euro for a strong bounce of 12 - 15 points.
Monday, October 6, 2008
Medium-term outlook on EURUSD
The weekly EURUSD chart shows a clear break of the long term uptrend and we are heading for the 38.2 retracement level at 1.31. The wave magnitudes give a slightly lower target, since we are in wave 5 of bigger wave A down and the magnitude of wave 3 were 21 points, if wave 5 repeats the steepness which should limit this wave the 1.28 might be the point where wave B should start. Hence, the truth will be between 1.28-1.31 our old assumption that 1.65 is due and we were in a ABC wave down to 1.36/8 is not valid anymore. The overall count is in a bigger price and timeframe now and medium term the 1.30 area will not do the trick. As you can see, this is the steepest decline in the EURO within 10 years. Going back and using a synthetic EURO 8, it only exists for 9 years, we can see in severe recessions we had similar moves of 35 point magnitudes in the early 90's. Anyway, since we have now a full fledged banking crisis in Europe and they spend hundreds of billions as well the trend will remain for a while. In the 1.30 area roughly it's time to buy the Euro for a strong bounce of 12 - 15 points.
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