Analysis: Cycle Top in the Euro?
- EUR/USD fails just below key Gann resistance level
- Cycles turning negative on the single currency
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EUR/USD waited until the last moment of our cycle turn window (perhaps even went through it by a few hours) before reversing course early on Wednesday. The exchange rate’s failure from just under the 2nd square root relationship of the year’s high at 1.3595 looks significant from a medium-term cyclical perspective and opens the way for further weakness in the near-term. Key pivots on the downside look to be the 6th square root relationship of the year’s low at 1.3430 and the 3rd square root relationship of the year’s high at 1.3360, with a daily close below the latter needed to confirm a resumption of the decline that started late last month. Unexpected aggressive strength back through the 7th square root relationship of the year’s low at 1.3545 would make us seriously doubt the negative cyclical view, but only a move through Wednesday’s high of 1.3578 completely invalidates the potential cycle top.
EUR/USD Daily Chart: November 21, 2013
Charts Created using Marketscope– Prepared by Kristian Kerr
Key Event Risks in Coming Sessions:
Source: DailyFX Economic Calendar
LEVELS TO WATCH
Resistance: 1.3545 (Gann), 1.3578 (Wednesday’s high)
Support: 1.3430 (Gann), 1.3360 (Gann)
Strategy: Sell EUR/USD on strength
Entry: Sell EUR/USD at 1.3495
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.