Forex Technical Update
Wedge Breakout, 1.04 Support:
- The projection from the previous update (emerging from a break above the 1H200SMA, and it becoming support), was 1.06. The market completed a wedge correction, with a throw-over to achieve this target. A throw-over is the temporary break above the wedge seen in the 4H chart.
- Note we are still under the 4H 200SMA and the 61.8% retracement level.
- Also, the RSI showed violation of the bearish momentum, but the reading fell right back done below 60 after cracking it. If the reading falls back below 40, we can regain some confidence that the bearish momentum that was established from the fall from 1.1062 to 0.9926, is still in effect. (The market did not have a strong enough rally to forget about this aggressive slide).
- The bearish continuation scenario should also see a break below 1.04.
- The daily chart shows that below 0.9926, we have the 2011 low as a target, near 0.97.
Bear Trap Scenario:
- Elliott Wave practitioners might caution against the bearish continuation because a rising wedge could be just a large wave A, and the decline could be just a wave B, t be followed by another correction rally in wave C.
- Proportionally however, this correction looks like it should be over, but it is simply a 50/50 from a pure technical perspective whether the decline will be a wave B, or a bearish continuation swing. A break below parity, 1.0, should be a good clue that it is NOT a bear trap.