• Daily: The EUR/USD broke below the 1.4200 support and did not stall at the 1.418 area of anticipated support. (Refer to Daily Video Technical Update 1.19.2010) It has also broken a long-term 200day MA suggesting we are in a major bearish mode.
• The intermediate projection is 1.3700. This is between the 61.8% and 78.6% retracement levels.
• However, the 50% retracement is the short-term projection at 1.40-1.4050, where there may be some support. Looking at the aggression of the decline, there may not be much of a correction even if the market does support it here.
• 4H: This is also the 150-161.8% expansion of the previous leg down, and is therefore a viable area for support.
• Looking at the 4H time-frame, we can see a possible correction to the 1.4150-1.42 area. From here there may be a final swing towards the 1.37 area.
• Another tool that can be used in re-entry into a trend is the parabolic which is basically a trailing stop. When the Parabolic switches to below the price, we have a correction of the decline. But when it switches back above price action, it suggests end of correction.
• The parabolic re-entry method assumes the correction is 1-leg and not complex. Used in complex corrections, the parabolic re-entry method may be premature and create false signals.

Fan Yang
Currency Analyst
Commodity Trading Advisor

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