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The case for the continued downtrend in EUR/USD...

FX:EURUSD   Euro Fx/U.S. Dollar
153 1 5
Monthly: I see an end to the almost year-long decline after one more move to support at around parity (see the explanation of the monthly targets at the link to my previous post). The recent low on 3/13 just missed falling to the 127.2% retracement of the last major swing into the all-time high; it's very rare to see price fail to make it to a 127.2% retracement level before a trend change, which adds to the case for more downside. We can see resistance to the current rally at a confluence of minor Fib retracement levels at 1.1275 - 1.1295.

Daily: Daniel B recently pointed out the confluence of the 61.8% retracement from the February high to Mar low, structure resistance and 50SMA; I've found another level to add to his, at 1.11275 (based on a 161.8% projection of the percentage advance to the high in Feb). IC             Markets mentioned his weekly swap level at 1.1109 in his last post, which adds to the case for the rally stalling in that area. But a bit above those levels, there is structure resistance at previous support that was tested three times before finally breaking; also, if we multiply that percentage advance into the Feb high by 200%, we get confirmation of that structure resistance at 1.1276... Then there's the 78.6% retracement of the Feb high to Mar low swing at 1.13034. It's no man's land from 1.1100 north, for over 200 km, uh, pips...

Addendum: The 141.4% and 161.8% retracement levels at the bottom of the daily chart are look-ahead values, based on a possible end to the rally at 1.12896 - just imagining...

6-hour: If the current rally is forming a zig-zag pattern, and if c = a on a percentage basis, then 1.11985 lines up fairly well with both the 141.4% b wave retracement at 1.1217, and the daily 50 SMA ; since we can expect price to reach the 127.2% retracement of the b leg, at 1.11562 (which adds to the initial confluence area) before a possible turn down, price can be expected to hesitate around that level to entice sellers before moving to the 1.1200-1.1220 area (or higher) to take out their stops. Adding wave b's 161.8% retracement to the confluence area of 1.1275 - 1. 1305             gives us an area that should be the line in the sand, at least for some time. I don't expect price to be able to make it through the no man's land to the 127.2% projection shown at 1.13581, although it's possible a climactic spike might probe the limits for additional stops before crashing...

Overall: I am beginning to see some weak signs of upside strength in some of my indicators, but they're appearing just as my other indicators are at extremely overbought levels. I don't see that as unusual, given the sharp character of the rally. The most objective opinion I can offer here is that we're nearing the end of a long downtrend that isn't finished. Somewhere in that 200-pip no man's land, we're going to find a place to go short... AGAIN.

PARITY OR BUST !!! (but just in case, let's remember to use stops...)
Daniel.B
2 years ago
I like your analysis, very, very detailed! Totally agree with you, if price does head into "no mans land" stops will be tripped sending it up to test the 786 Fib which is also confluent with 1618 Extension (good of you to point that out)! Which is where if my initial short stops are taken out then I'll be looking to enter short in that area till completion of the downtrend. And as you stated we can very well be nearing the end of the DXY rally and Euro pitfall, at least temporarily, until then Parity or Bust! lol =)
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