Daily Technical Update May 3, 2010 EUR/USD Declines After Double 3's
- A double 3 is a corrective wave that connects 2 of any corrective structures.
- 15-min: In early this morning's report, the market consolidated, and we were tracking a second part of a corrective structure anticipating either a zigzag to 1.3270 area (38.2% retracement), OR a triangle type pattern, suggested by the negative RSI reversal.
- What turned out was a regular flat, which is really the 3rd type after the zig zag and triangle, and not in that order of frequency. Also the correction was limited at 23.6%.
- Practically however, it makes no difference, because the anticipation was that a continuation decline is about to take place after this correction. A continuation was suggested by initial price action.
- Now we have a pause again as the RSI dips to oversold levels.
- Wait until the RSI returns to above 30 (maybe 35), and see if the current pause will be resolved. Of course, if the market chooses to, it can just lock the RSI in oversold and continue the decline as is the case in many accelerated markets.
- Continue tracking this decline for signs against our outlook towards 1.3060. Do not let the confirmations block your vision for signs against this outlook. The 1.3015, last week's low, may have some support. In a downtrend, always check the character of rallies to see if they are just minor corrections.
Fan Yang Currency Analyst Commodity Trading Advisor