Looks like this may be a MAJOR KEY WEEK for EURUSD traders. If not this week, then certainly soon. The bottom area of of 1.1867 to 1.1977 that is only a few ticks away will almost certainly be tested. If it does not hold here, I think (key word) the pair could head back to the 1.0563 area in due time.
There are plenty of fib clusters, etc at this bottom. It is a MAJOR level to many, many eyes. One reason it is key to me is that it is the 261.8% price extension of the very first move up from the all time low of the pair. All reasons here are very significant.
If the near term bottom does give way, then I would guess(another key word) that a good many big boys and girls who are long from way down under may begin to question the validity of holding on and the decent could be rapid as they begin to sell and take profits.
I think there is a good possibility that the bottom will give way quickly. There are probably a zillion stops in this area. We may retrace back up into this area, but it should be interesting to say the least. Need to exercise extreme caution IMHO.
If the near term bottom does hold, then we may be range bound again and it will be time to re-think everything. Maybe the much anticipated head and shoulders pattern will re-emerge. It is certainly a possibility or possibly another double top in the 1.2540 area also and then down (or up).
I use mostly price extensions with fib, rather than price retracements. My studies validate both of these key areas. I am sure there are a zillion different fib interpretations of this pair.
I would imagine many of you are short from somewhere up above like me, or maybe you covered on Friday close. I thought it was very interesting how we closed on the lows on Firday. There was no covering that I could detect. This certainly sent a message to me that we are going to test this bottom. We may open up and begin a retracement, who knows, but the bottom line (no pun intended) is that we are at critical mass. It is upon us as they say.
I am short from a good distance above this approach and I my plan is to stay short thru the bottom, however there will almost certainly be some strong buying at this level and I am not too sure how long I will stay with a bounce of any magnitude. Once below this level, my conviction would change.
I would be interested in hearing from others of you who have some ideas. I am sure there are many e-wave views out there. This is much to complicated for me, but I enjoy learning about the price extensions predicted by this method. I am a generalist and self-taught trader and by no means a technician to any degree. This is just my "Vision". I would like to hear some other stories or views of this. I will do my best to keep track of things here once and a while so we can follow the path.
If I traded on fundamentals, I would never think the USD could make this rally. I am very gloom and doom when it comes to our current economic situation. Frankly, scared too death. The warning signs are everywhere in my opinion. I have moved much of my longer term investments out of the U.S. and/or into hard assets. But I am a trader and not a fundamentalist.
Good Trading to all,
my indicators show EUR/USD is going UP as much as 200 pips - maybe more.
current = 1.2039 (average price).