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Monday, July 4, 2011

EUR/USD - Wave iii down or a bullish triangle?



Back from a nice vacation to the Balearic Islands. Hope you are all well.


Looking at the charts for the first time in 14 days, there is a couple of surprises. The first is in EUR/USD. Just before leaving for my vacation I thought that resistance at 143.05 would hold, but that was not the case and we are now testing the next important resistance area at 145.54-145.62. I would expect this resistance to hold, as we have negative divergence on both the MACD-Indicator and my proprietary Indicator, which is a warning of a possible trend-reversal. That said we have two possible scenarios. The first (my preferred) is that we will see a powerful wave iii down below 140.72. The second scenario is that a triangle is building, if this the case. The triangle will ultimately be bullish and call for a new high above 149.39. A break above 146.96 will favor the triangle scenario. No matter which scenario is correct, we should first see a decline to at least 143.23.





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