Daily Outlook26.11.2007 by Dimo Dimov

The sharp sell-off started from 1.4966 signals potential temporary high. As you know, in the latest midterm analysis, I pointed that I expect that we are topping and at least few months fall should follow with minimum requirement 1.3664 (for more information see the latest midterm analysis). The current fall is impulsive in nature upon me which is very early signal in favor of the presented midterm idea. With an eye on my expectations I entered short on Friday and if the fall resumes, I will add to the short position. A first signal for a resuming of the fall will be below 1.4803 and confirmation – below 1.4783. My expectations for the length of the expected wave 3 down is 1.618 of the length of wave 1 i.e. I expect an immediate sell-off of 300 pips in wave 3. The key resistance is 1.4895 which is 61.8 % retracement of the potential wave 1.

Trading strategy: 06:00 EST; 10:00 GMT

Short position from 1.4867, move the stop loss from 1.4936 to 1.4905, target - opened

Add to the short position on break of1.4804 (sell stop order at 1.4803), stop loss – 1.4881, target - opened

Confidence level – changed from low to moderate

This analysis has only informational and educational purpose and does not represent a proposal for buying or selling currency contracts.