EUR/USD Might be Developing the Last Wave of a Zig Zag

• Daily: The 1.30 resistance has cracked. The outlook may be changed since the market first tested the 1.30 level. However the bearish scenario still exists ahead of the short-term bullish outlook. An important resistance exists at 1.3250. The market may be respect this if this rally as a wave 4. If that is the case, we are in the last wave of a zigzag correction to be followed by wave 5, down towards 1.1880.
• However, if the market climbs above 1.3250, it is likely wave 5 was already complete, and we are in a major correction, and we may only be in the first leg of that correction. There may still be a decline to follow, but that should not reach 1.1880, and should be treated as a correction since the mode has switched to bullish.
• The weekly chart shows this entire decline in 2010 and where a stronger correction can extend to.

• Weekly: The weekly chart shows that the market has been rising sharply, and consistently over the past 8 weeks. The bullish scenario might extend further to 1.35/36 area, the previous consolidation zone. This will also test the 50 moving average in the red, and the 50% -61.8% retracement zone.
• The RSI should be at 60. I would say this is the test of long-term bullish strength. For now, intermediate term strength appears to be holding, and the long-term look is ranging for now.

Fan Yang
Currency Analyst
Commodity Trading Advisor

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