Price & Time: EUR/USD Correction Over?
- EUR/USD advance stalls near 20-day MA
- Cyclical analysis points to a deeper recovery
Unfamiliar with Gann Square Root Relationships? Learn more about them HERE.
The correction in EUR/USD this week was quite aggressive as the exchange rate retraced almost 3 big figures from the lows last week. The big question now is was that it? With the extreme negative sentiment cleared out is the market now ready to resume it decline? It is tough to tell. We could easily see the rate turn down aggressively here, but that is not our favored scenario. Cyclical analysis seems to favor a few weeks of upside and the sentiment/positioning was so severe for so long that we have doubts as to whether three days was really long enough to clear out the condition. The next couple of trading days should prove important in determining in which direction we are headed. Aggressive weakness obviously will point to a downside resumption while tepid weakness will open the way for a further squeeze. We like taking a shot on the long side around 1.2600 with a tight stop.
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EUR/USD Daily Chart: October 10, 2014
Charts Created using Marketscope – Prepared by Kristian Kerr
Key Event Risk in the Week Ahead:
LEVELS TO WATCH
Resistance: 1.2725 (Gann), 1.2785 (Fibonacci)
Support: 1.2615 (Gann), 1.2580 (Gann)
Strategy: Buy EUR/USD
Entry: Buy EUR/USD at 1.2615
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
To contact Kristian, e-mail firstname.lastname@example.org. Follow me on Twitter at@KKerrFX.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.