• Daily: The EUR/GBP has completed invalidated the Bullish wave count we had been assessing the market with. Instead the market looks to be in a full Gartley retracement, which would be complete at the 0.86 (76.8% retracement).
• This swing projection is in the short-term and may be reached by next week, if the market slows down the decline. Otherwise, it may be reached by the end of this week.
• Weekly and Monthly: Now that the long-term bullish outlook is invalidated, the market has started to follow the long-term outlook posted before the New Year. (Refer to Weekly Technical Udpate 12.30.2010; towards the end).
• Although the recent bearish action invalidates a long-term bullish case, ultra-long term (2-3 year outlook can still be bullish). The 1/2 to 1-year outlook however is bearish.
• A possible wave count puts the current decline to the 0.80 area around summer-fall time. This would be a completion of a bullish Gartley.
• If it stays above 0.82, the current wave count is correct. If it goes below substantially, for example reaches 0.79, then the count might need to be adjusted (see alt.count).
• Daily: Looking back at the daily, it appears the 0.8600 area would have some support and the stochastic is already oversold. There may be a correction rally in the upcoming weeks.
• So the long-term outlook is bearish towards the 0.80 area.
• ultra-long-term outlook is bullish if market bottoms around 0.80.
• intermediate-term is bullish if 0.8600 area sees bottoming action.
• short-term bearish towards 0.8600.

alt.count

Fan Yang
Currency Analyst
Commodity Trading Advisor

Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. CMS will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analyses.

Foreign currency trading is not conducted on an exchange. CMS is acting as a counterparty to its clients’ transactions and as a result, CMS’ interests may be in conflict with its clients. Since CMS acts as the buyer or seller in the transaction one should carefully evaluate any trade recommendation provided by CMS or any of its solicitors. Foreign currency trading involves a substantial risk of loss and may not be suitable for all investors.

All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.