- 4H: The EUR/USD pair has been choppy, and developing a possible rounded bottom, which would be a base for a rally attempt. (Refer to Daily Video Technical Update 3.16.2010).
- Currently, the market is showing a bearish divergence with the stochastic. The stochastic is rolling down from the overbought zone after a crossover and the market looks poised for a correction.
- The market is showing strength but it has been in the short-term. Now it looks like an attempt in the intermediate term.
- The current retracement should be stalked with a bullish anticipation to follow bottoming action. We can see in the 4H time-frame that in this choppy mode, it can decline to the 1.3655 area or 61.8% retracement, which meets a rising trendline. Let’s look at the 1H time-frame.
- 1H: The 1H time-frame shows retracement levels of a smaller most recent upswing. We can see that the 61.8% retracement here is near 38.2% retracement of the 2 upswings together. If the market is already turning bullish for the EUR/USD, the current decline should be supported here. But still, we need to monitor the intermediate resistance area near 1.3850. A break above that level is needed to confirm an intermediate bullish outlook. Now let’s zoom back out to see the intermediate outlook.
- Daily: The daily time-frame shows a more clear picture of the existing trend and the reversal implication of the rounded bottom. It also shows a rather clear area of resistance at the 1.3850 to the 1.3880 (38.2% retracement) level. Bullish attemps also test the SMA-50, which is sloped heavily downwards and has been diverging from the SMA-200 above.
- The orientation of the MA and the apparent decline suggests we should use caution for the bullish outlook. An intermediate target after a break above 1.3850 is near 1.4150/1.420 around the 61.8% retracement level. Then, look for topping action as it tests a powerline and SMA 200.
Fan Yang
Currency Analyst
Commodity Trading Advisor
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