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Price & Time: Euro Correction Still Does Not Look Over

Price & Time: Euro Correction Still Does Not Look Over

2013-02-28 16:53:00
Kristian A. Kerr,

This publication attempts to further explore the concept that mass movements of human psychology, as represented by the financial markets, are subject to the mathematical laws of nature and through the use of various geometric, arithmetic, statistical and cyclical techniques a better understanding of markets and their corresponding movements can be achieved.

Foreign Exchange Price & Time at a Glance:


PT_euro_correction_ongoing_body_Picture_4.png, Price & Time: Euro Correction Still Does Not Look Over

Charts Created using Marketscope – Prepared by Kristian Kerr

-EUR/USD has recovered over the past few days from just above the 1.3010 6th square root progression of the year-to-date high – a level that usually provokes a reaction

- Near-term time cycle analysis is positive on the Euro for a few more days

- Cluster of various Fibonacci and Gann levels in the 1.3165 area so far caps

- 1x1 Gann line from February high near 1.3270 is now critical resistance and only above this level signals a broader reversal

- On the downside, 1.3010 is now a key near-term pivot with weakness below this level required to signal a resumption of the broader decline

Strategy: Tighten stops on short positions to just above 1.3170. If it triggers, we will be looking to get short again early next week from higher levels.


PT_euro_correction_ongoing_body_Picture_3.png, Price & Time: Euro Correction Still Does Not Look Over

Charts Created using Marketscope – Prepared by Kristian Kerr

- USD/CAD touched its highest level in over seven months this week but has so far been unable to gain much traction above the 1.0275 78.6% retracement of the 2012 range

- Bias remains higher in Funds, but a close over 1.0275 is now required to signal another leg higher towards a Fibonacci convergence near 1.0350

- Some caution is warranted over the next couple of trading days, however, as a minor time cycle turn window is in effect

-Immediate support seen around 1.0240

- Only weakness under a cluster of retracements between 1.0160 and 1.0175 would signal that a more important counter-trend move is underway

Strategy: Long positions still favored in Funds, but tighten stops to just under 1.0160.


PT_euro_correction_ongoing_body_Picture_2.png, Price & Time: Euro Correction Still Does Not Look Over

Charts Created using Marketscope – Prepared by Kristian Kerr

- EUR/CHF broke convincingly beneath the 50% retracement of the September to January advance late last week

- Our bias is now lower with weakness under the 1.2120 fourth square root progression from the year-to-date high now needed to set up further weakness

- A measured move of the mid-January to early February decline projects further support at 1.2075

- Shorter-term time cycle analysis techniques are positive for a couple of days

- Immediate resistance is seen around 1.2220, but only strength above a cluster of various Fibonacci relationships near 1.2290 would signal a more important reversal

Strategy: Range break got us short. Stay short with a stop just over 1.2290.

Focus Chart of the Day: EUR/USD

PT_euro_correction_ongoing_body_Picture_1.png, Price & Time: Euro Correction Still Does Not Look Over

We have written in recent notes that we are looking for a counter-trend move lasting a few days to develop in EUR/USD and the other major European pairs before embarking on another move lower. This still looks to be occurring with Thursday’s weakness in the single currency just being an expected stutter step before the next push higher into the cyclical turn window slated for early next week. Too much more weakness on Friday cannot be seen, however, as this would undermine the immediate positive cyclical picture and signal an early resumption of the broader Euro downtrend.

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

To contact Kristian, e-mail instructor@dailyfx.com. Follow me on Twitter at@KKerrFX.

Are you looking for other ways to pinpoint support and resistance levels? Take our free tutorial on using Fibonacci retracements.

To receive other reports from this author via e-mail, sign up to Kristian’s e-mail distribution list via this link.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.


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