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Euro Downtrend Intact; Breakdown Possible Soon

Friday, 14 November 2008 21:14:51 GMT  |  Jamie Saettele, Senior Currency Strategist

The euro / dollar retraced over half of yesterday's rally, ending down over 150 pips for the day and down a little over 200 pips for the week.  Bears remain in control at mid-month.  

It is always important to stay on top of the big picture, especially when intraday spikes result in moves of 300+ pips…in both directions.  This is the chart (with updated pricing) that is shown in the monthly forecast.  The count suggests that, within the next 3 or 4 years, the EURUSD could fall below .8225.  The decline from 1.60 is wave 1 of (C) and is nearing completion.    

As mentioned, larger wave 1 may be near completion.  A drop below 1.2329 would satisfy minimum expectations for wave 5 of 1 and the EURUSD could see a test of 1.20 prior to any significant rebound.  A move above parallel channel resistance and the 20 day SMA (in red) would require reconsideration of the bearish bias.

This is a close up of wave 4, which if complete, is a triangle.  The incredible spike to 1.2855 in late US trading yesterday is viewed as the end of wave 2 (of 5).  I wrote about the opportunity that spike presented last night.  If wave 5 is underway now, which would lead to a break of 1.23 and possibly a test of 1.20 before the end of November, then 1.2855 will remain intact.

 

 

 

Jamie Saettele writes Forex Technicals: The Day Ahead, Monday-Thursday (published at 6 pm EST), Daily Technicals  every weekday morning (9 am EST), COT Analysis (published Monday mornings), and analysis of currency crosses throughout the week.  He is also the author of Sentiment in the Forex Market.

 

Contact at jsaettele@dailyfx.com

 

 

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